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Benefits of a Roth IRA Conversion

Roth IRA Conversion

The main Roth IRA advantage over a Traditional IRA is that, if you qualify to make contributions, all distributions from the IRA are tax-free. Furthermore, unlike traditional IRAs, you may contribute to a Roth IRA for as long as you continue to earn an income. However, with a traditional IRA , you can’t make any contributions after you reach age 70 1/2.  As a result, a Roth IRA conversion is one way to fund the account.

Self Directed Traditional IRA vs Self-Directed Roth IRA

Self-Directed Traditional IRA

Self-Directed Roth IRA

Tax deductible contributions

In this case, contributions are not tax deductible – in other words, contributions to a Roth IRA are from tax dollars

Distributions may be taken by age 59 1/2 and are mandatory by age 70 1/2

Unlike traditional IRA, there’s no Mandatory Distribution Age. Therefore, there’s no requirement to take distributions

Taxes are paid on the amount of distributions (10% excise tax may apply if you withdraw prior to age 59 1/2)

Conversely, there are no taxes on distributions if you follow rules and regulations

Available to everyone; no income restrictions

  • In contrast, Roth IRA is available to single filers, Head of Household or Married and Filing Separately (if you didn’t live with your spouse that year). Modified adjusted gross income is $122,000. These groups can make a full contribution. But you can’t make a contribution if your adjusted gross income is greater than $137,000.
  • Joint filers with modified adjusted gross incomes up to $193,000 can make a full contribution. Again, it’s phased-out starting at $193,000. So you can’t make a contribution if your adjusted gross income is greater than $203,000.

Use funds to purchase a variety of investments (stocks, real estate, precious metals, notes, etc.)

Again, use funds to purchase a variety of investments (stocks, real estate, precious metals, notes, etc.)

IRA investments grow tax-free until distribution (tax deferral)

Earnings and principal are 100% tax free if you follow rules and regulations – No tax on distributions – maximum tax-deferral

Income/gains from IRA investments are tax-free

Again, income/gains from IRA investments are tax-free

If you purchase real estate property and take possession of the property after 59 1/2, you’re subject to tax

Whereas, if you purchase a domestic or foreign real estate property, then taking possession after 59 1/2 is tax-free

Get Started with a Roth IRA

Surprisingly, a Roth IRA conversion is easy to do. Whenever you’re ready, An IRA expert from the IRA Financial Group can help you fund your Self-Directed Roth IRA LLC with traditional IRA or 401(k) funds.  Convert now to experience the Roth IRA advantage!

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