INDUSTRY INSIGHT
FINANCIAL STRATEGY
SPONSORED CONTENT
Now May Be
the Time to
Convert Your
Traditional to
a Roth IRA
I
f you were thinking about converting your
traditional IRA to a Roth IRA, now may be
the time.
As of 2010, income limits on converting
from a traditional IRA to a Roth IRA were
repealed.
While a qualified tax professional can help
you determine whether a Roth conversion
is right for you, there are several distinct
advantages to a Roth that you should
consider.
1. TAX-FREE GROWTH – A Roth IRA offers the
ability to grow assets income tax-free. The full
value of the Roth IRA can compound tax-free
over an extended period of time, which may
yield a greater future value than that of a
traditional IRA.
2. NO MINIMUM DISTRIBUTIONS – Roth IRAs
do not have required minimum distributions
beginning at age 70½ for the owner, unlike
other IRAs. For those who do not need to tap
into Roth IRA funds for their living expenses,
this means that funds in their Roth IRA can
grow uninterrupted during their lifetime.
Beneficiaries are still subject to required
minimum distribution rules.
3. ACCESS TO FUNDS – Any distributions of
earnings are tax-free and penalty-free after
five tax years and age 59½. Earnings taken
prior to the end of the five-year period and the
attainment of age 59½ are subject to ordinary
income tax. A 10 percent penalty will also
apply if taken prior to age 59½ unless another
exception applies. Distributions of converted
funds within 5 tax years of the conversion date
are also subject to the 10 percent penalty if
prior to age 59½, even though the amounts
were taxed at the time of conversion. (Note
that there are some exceptions to the penalty.)
0293629-00002-00, Ed 11/03/2017, Exp 11/03/2018
4. CONTRIBUTING AFTER 70½ – An individual
may make contributions after age 70½ (if
there is eligible earned income and subject to
income limits). Traditional IRA contributions
cannot be made after age 70½.
5. LEGACY BUILDING – Since Roth IRAs do not
have a minimum distribution requirement
during the owner’s lifetime, the funds can
remain in the account for the benefit of your
heirs.
6. INCOME TAX-FREE DISTRIBUTIONS – After
five tax years from the opening of a Roth IRA,
distributions are federal income tax-free if the
owner has reached age 59½, died, become
disabled, or is a first-time homebuyer ($10,000
lifetime limit). Distributions do not come
into play in determining the amount of Social
Security benefits that are subject to taxation.
7. NOT ALL OR NOTHING – The decision is yours.
You can choose to convert all or a portion
of your account, if you qualify. You can also
convert smaller amounts each year so that the
tax hit is taken over a number of years.
The rules for traditional IRA conversions
also apply to 401(k) plan conversions. It may
be an ideal time to simply roll over a 401(k)
plan from a former employer directly to a
Roth IRA, regardless of your modified adjusted
gross income.
Roth IRAs are a key component of
retirement planning, so don’t let this
opportunity pass without giving it a great deal
of consideration.
These materials are for informational or
educational purposes only. The information
is not intended as investment advice and
is not a recommendation about managing
or investing your retirement savings. In
providing these materials Pruco Securities, LLC
is not acting as your fiduciary as defined by
the Department of Labor. Please consult with
a qualified investment professional if you wish
to obtain investment advice.
The Prudential Insurance Company
of America and its licensed financial
professionals do not render tax or legal advice.
Please consult with your tax and legal advisors
regarding your personal circumstances.
SHANNON RHEA offers insurance and securities products and
services as a Registered Representative of Pruco Securities, LLC
(Pruco). The Prudential Insurance Company of America, Newark,
NJ and Pruco are Prudential Financial companies. 1.800.201.6690.
Shannon Rhea, MBA
5000 Stonewood Drive Suite 210 • Wexford, PA 15090
Office: 724.799.2872 • Cell: 724.766.0714
[email protected]
This advertisement provided courtesy of Prudential. For more information,
contact Shannon Rhea, MBA, is a Financial Professional with The
Prudential Insurance Company of America’s Keystone Mountain
Financial agency located in Pittsburgh, PA. Shannon Rhea can be
reached at [email protected] and 724.940.2440. Offering
securities products and services as a Registered Representative of Pruco
Securities, LLC (Pruco). The Prudential Insurance Company of America,
Newark, NJ and Pruco are Prudential Financial companies.
1.800.201.6690.
CRANBERRY ❘ SPRING 2018
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