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Thread: Roth Conversion
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Old 11-20-2022, 02:31 PM
retiredguy123 retiredguy123 is online now
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If you are able to convert all of your retirement assets into a Roth, it will help your heirs in two ways. One, they will owe no income taxes. And two, they will not need to hire a tax expert to handle the withdrawal and tax process.

If your traditional IRA, like mine, consists of a combination of pre-tax deposits and after-tax deposits, you, or your heirs, can exclude the after-tax deposits from your taxable income when you withdraw the money. If that is the case, you need to provide your heirs with a copy of your last IRS Form 8606 so they don't mistakenly pay tax on 100 percent of the account. If you have been retired for many years, the last Form 8606 may have been prepared years ago. It can be an important document that should be kept with your will. And, if you inherit a large traditional IRA, you should review the deceased's tax returns to see if they ever filed a Form 8606.

There is another thing to consider if you have a traditional IRA. If you move into an assisted living facility or a nursing home, a large percentage of the cost will be tax deductible medical expenses. In the case of a nursing home, 100 percent is tax deductible. And, it could be about 60 percent in assisted living. So, that could be another way to avoid tax on your IRA.

Last edited by retiredguy123; 11-20-2022 at 02:39 PM.