Quote:
Originally Posted by villagetinker
Hopefully your financial advisor has a tax professional associate. There are many things to consider aside from just the tax issues. for example there may be a 5 year waiting period before you can withdrawal the ROTH funds. I had looked into this years ago, but I missed the optimal time to do the conversion, so I just live with RMDs.
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Out of any Roth IRA withdrawals are made in the following order: original Roth Contributions, Roth conversion contributions and lastly earnings. It is the earnings which are subject to the penalties, not the withdrawal of contributions. That means that at least 5 years must elapse between the the tax year of your first contribution to a Roth and withdrawals of earnings. Once the 5 year rule has been met and the account owner is 59 1/2 or older they may make a qualified distribution exempt from taxes and penalties.
So many factors to determine in making this decision - age of the client, health of the client, taxable income/tax bracket now, investment goals, tax brackets in the future, etc,