Need Tax Advice On A Roth IRA

[DimondAngels]

Any retired CPA's out there who can help me out?
Basically on 3/11/20 I converted a traditional IRA acct. that was valued at $46K into a Roth IRA. Since March the account has grown to over $100K and I was told that if I put the original $46K back into a traditional IRA that there wouldn't be any taxes due.
Any advice would be appreciated. Kevin dimondangels@yahoo.com

[Villageswimmer]

Any retired CPA's out there who can help me out?
Basically on 3/11/20 I converted a traditional IRA acct. that was valued at $46K into a Roth IRA. Since March the account has grown to over $100K and I was told that if I put the original $46K back into a traditional IRA that there wouldn't be any taxes due.
Any advice would be appreciated. Kevin dimondangels@yahoo.com


This advice is definitely incorrect. Check facts at irs dot gov . Roth conversions can no longer be reversed.

[Stu from NYC]

If you are going to be paying taxes on the $ 46,000 the appreciation should be tax free.

Not an accountant but would think I am correct.

However if this would be me would speak to a tax guy.

[retiredguy123]

If you are going to be paying taxes on the $ 46,000 the appreciation should be tax free.

Not an accountant but would think I am correct.

However if this would be me would speak to a tax guy.
The appreciation is tax free. Most people only want to recharacterize a Roth conversion when the value goes down, not up.

[davem4616]

IMHO I really wouldn't be looking for tax advice from this forum.....just saying

[JoelJohnson]

Yes, any gain on a ROTH is tax free, and no, you can not reverse it back to an IRA (they changed the law last year). You pay the taxes when you go from an IRA to a ROTH (or any withdrawal from an IRA unless it's a special gift). Also be aware that if you are on SS your SS may be taxable because of the conversion.
The best advice anyone can give is to see a tax accountant.

[Boomer]

Any retired CPA's out there who can help me out?
Basically on 3/11/20 I converted a traditional IRA acct. that was valued at $46K into a Roth IRA. Since March the account has grown to over $100K and I was told that if I put the original $46K back into a traditional IRA that there wouldn't be any taxes due.
Any advice would be appreciated. Kevin dimondangels@yahoo.com



Just a note about a potential separate issue:

If you are on Medicare and the conversion threw you over the threshold for higher income, you will have to pay more for Part B and for the drug coverage premium.

Known as IRMAA (income-related monthly adjusted amount), the added premium hits two years after the tax year in which your income crossed the line for the increase. This is an either/or amount. You either cross the income threshold or you don’t — and there are thresholds that follow the first one, as income increases.

The income the IRS uses is called MAGI (modified adjusted gross income). The income charts and premium increases can be found with a Google that will take you to Medicare.gov or ssa.gov for the official numbers.

My favorite accountant called it “getting your money out of its prison” when he talked about tapping into IRAs.

A good accountant can guide your decisions far more objectively than a run-of-the mill financial advisor. (I am neither of those things so my advice is worth exactly what you are paying for it.)

Break-Out Boomer

[manaboutown]

OP, I would not seek tax advice from a retired CPA or attorney as they are retired and no longer keep up with changes in tax laws. As a couple of posters have pointed out, the law changed just last year!

As Boomer reminded us, Medicare premiums rise with income. It will rise even due to a one time jump as from an IRA withdrawal or the sale of a home with a large gain. Under unusual circumstances premium increases can be appealed. MOAA - These Actions Will Increase Your Medicare Part B Premiums (https://www.moaa.org/content/publications-and-media/news-articles/2020-news-articles/these-actions-will-increase-your-medicare-part-b-premiums/)

[Dan9871]

Talk to Bob Bloom 425-941-5224

Robert Bloom CPA - Home | Facebook (https://www.facebook.com/BobBloomCPA/)

[CoachKandSportsguy]

Also remember that if you have more expenses than current income, so that you don't pay any federal taxes, always take money out of your 401K and IRA up to the point that you now owe a tiny bit of tax. That way, the contributions go in tax free and come out tax free, which means that you won the tax sheltered game 100%

sportsguy

[rjm1cc]

No you can not. This might be of interest. Q&A: Can I Undo My Roth Conversion? (2020) – Marotta On Money (https://www.marottaonmoney.com/qa-can-i-undo-my-roth-conversion-2020/)

[Stu from NYC]

Too much money involved to do anything other than talk to an expert.

[kathyspear]

Known as IRMAA (income-related monthly adjusted amount), the added premium hits two years after the tax year in which your income crossed the line for the increase.


Am I correct in assuming that the IRS provides income info to Medicare every year? So if you are paying the added premium due to an IRA conversion or some other alleged "windfall" are your monthly Medicare Part B & D premiums adjusted automatically in future years or does one need to contact them to get them adjusted?

Thanks.

kathy

[DON10E]

Any retired CPA's out there who can help me out?
Basically on 3/11/20 I converted a traditional IRA acct. that was valued at $46K into a Roth IRA. Since March the account has grown to over $100K and I was told that if I put the original $46K back into a traditional IRA that there wouldn't be any taxes due.
Any advice would be appreciated. Kevin dimondangels@yahoo.com

Why would you want to put the money back into the IRA anyway? If it were possible, which I don’t think it is, you would just be creating the same tax trap you’re trying to avoid with the conversion. You’ll pay tax on the $46k and on all the gains from the $46k, forever. Even when you and your spouse die, if you haven’t paid your kids will.

Be happy you made $54k tax free. You won!

😉

[tcxr750]

IMO. Just remember that at age 70 1/2 you will be required to make withdrawals from your conventional IRA at percentages determined by the government wether you want to or not. The percentage goes up every year.
Time for an accountant knowledgeable in the consequences of ROTH vs conventional IRA.

[Villageswimmer]

IMO. Just remember that at age 70 1/2 you will be required to make withdrawals from your conventional IRA at percentages determined by the government wether you want to or not. The percentage goes up every year.
Time for an accountant knowledgeable in the consequences of ROTH vs conventional IRA.

No. The RMD age is now 72. There is pending legislation that could hike it to age 75.
Don’t take advice for such critical financial information on an internet site.

[retiredguy123]

IMO. Just remember that at age 70 1/2 you will be required to make withdrawals from your conventional IRA at percentages determined by the government wether you want to or not. The percentage goes up every year.
Time for an accountant knowledgeable in the consequences of ROTH vs conventional IRA.
The required mimimum distribution age is 72, not 70 1/2. Check the new law.

[tcxr750]

Good news for those 70 1/2. Those RMDs will still be due wether you want to or not.

[retiredguy123]

It's complicated, but the way the math works out, the new RMD law will delay the RMD start date by two years for those with a birthday in the first half of the year. But, it will only delay the RMD start date by one year for those with a birthday in the second half of the year.