Is It Worth It To Change a Rollover IRA to a Roth IRA?
Roth IRAs are all the rage, and for good reason. Your assets are able to grow and grow throughout your life without taxes or distributions. However, a Roth IRA might not be for everybody. There are many factors to consider when deciding whether to change a Rollover IRA to a Roth IRA. Keep reading to learn more about Rollover IRAs, Roth IRAs, things to consider, and how to get started today if you decide that it is the right move for you.
Rollover IRA vs Roth IRA
A Rollover IRA is an account that allows you to move funds from your old employer-sponsored retirement plan into an IRA. With an IRA rollover, you can preserve the tax-deferred status of your retirement assets, without paying current taxes or early withdrawal penalties at the time of transfer.
A Roth IRA s an Individual Retirement Account to which you contribute after-tax dollars. While there are no current-year tax benefits, your contributions and earnings can grow tax-free, and you can withdraw them tax- and penalty-free after age 59½ and once the account has been open for five years.
The main difference between a Rollover IRA and a Roth IRA is the tax treatment.
Factors to Consider
Nobody has a crystal ball to see into their future, which makes it difficult to predict what your financial situation will be decades from now. However, it is important to do your best to answer the following questions to find out whether you should change a Rollover IRA to a Roth IRA.
- Do you expect to go up a tax bracket? If you are expecting your income to go up significantly enough to move up a tax bracket, you will need to pay more taxes later when you draw from your Roth IRA. With a Rollover IRA, you can pay the taxes now at the lower rate. If your income is low and you expect it to go up, changing over is ideal for you.
- When do you plan to use the money? These accounts are typically used to save for retirement. The more time you have for the money to grow, the better the decision is to make the switch. Translation: If you’re young, go for it!
- Do you have a beneficiary? Beneficiaries would need to pay income tax if they inherited a traditional IRA from you, giving them a tax burden to pay after your death. With a Roth IRA, they would not be subject to pay these taxes, however, they will not be able to take full advantage of the Roth because money would need to be drawn within 10 years of your death. If you do not want to leave your beneficiaries with a tax burden, switching is a great option for you.
- Have you made any other major tax moves this year? Changing your IRA will increase your income for the year on your taxes. This can cause tax implications for you, so if you have already made a major tax move this year, it might be beneficial to wait.
- Do you have money to pay for the taxes? You’ll be hit with a tax bill when you change your Rollover IRA to a Roth IRA. Make sure you have the cash on hand to pay this bill if you’re considering making the conversion.
How to Get Started
Changing your Rollover IRA to a Roth IRA is easy. At Priority Gold, we have a proven four-step process that makes it easy to open a precious metals IRA, and we guarantee you the highest caliber customer service. Our IRA specialists will answer all of your questions, work with your current custodians to ensure a seamless transition, provide you with a free metal evaluation, and continually help you to review your portfolio.
- We gather the Account Holder Information
- You decide on who your Beneficiary Designation will be
- You provide the Source of Funds
- We provide the Transfer Instructions
About Priority Gold
By rolling over your IRA, 401(k), 403, TSP, or 457 Plan into our Precious Metal IRA Account, you can achieve the same profits that you would gain by purchasing gold or silver directly, while also enjoying the benefits that your retirement account provides. If you are ready to invest in gold to protect your savings and secure your future, we can help.
Priority Gold is one of the most trusted precious metals dealers in the United States with BBB A+ Rating, AAA Rating with Business Consumer Alliance, and 5 Stars Rating with TrustLink. We specialize in providing precious metals investment services with Security, Liability, and Great Convenience for customers. Our team is committed to helping streamline their precious metals purchases at a fair price, selecting suitable precious metals portfolios, and meeting their essential financial objectives.
Self-directed precious metals IRAs allow you to invest in gold and silver so you can better diversify your investment portfolio, which can be crucial protection during turbulent financial markets. We offer Free Storage for qualifying Gold & Silver IRA accounts, a fast & easy gold buying process, and smooth IRA Transfer. Priority Gold guarantees the highest customer service standards, which come with honesty, professional conduct, and the Ethical Code of Business.
For more information, visit us at prioritygold.com.