Need Tax Advice On A Roth IRA

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  #1  
Unread 09-16-2020, 06:48 PM
DimondAngels DimondAngels is offline
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Default Need Tax Advice On A Roth IRA

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
  #2  
Unread 09-16-2020, 06:56 PM
Villageswimmer Villageswimmer is offline
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Quote:
Originally Posted by DimondAngels View Post
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.
  #3  
Unread 09-16-2020, 07:38 PM
Stu from NYC Stu from NYC is offline
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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.
  #4  
Unread 09-16-2020, 08:00 PM
retiredguy123 retiredguy123 is offline
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Quote:
Originally Posted by Stu from NYC View Post
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.
  #5  
Unread 09-17-2020, 07:06 AM
davem4616 davem4616 is offline
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IMHO I really wouldn't be looking for tax advice from this forum.....just saying
  #6  
Unread 09-17-2020, 07:07 AM
JoelJohnson JoelJohnson is offline
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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.
  #7  
Unread 09-17-2020, 09:37 AM
Boomer Boomer is offline
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Quote:
Originally Posted by DimondAngels View Post
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
  #8  
Unread 09-17-2020, 09:45 AM
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manaboutown manaboutown is offline
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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
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Last edited by manaboutown; 09-17-2020 at 10:15 AM.
  #9  
Unread 09-21-2020, 08:05 AM
Dan9871 Dan9871 is online now
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Talk to Bob Bloom 425-941-5224

Robert Bloom CPA - Home | Facebook
  #10  
Unread 10-20-2020, 03:47 PM
CoachKandSportsguy CoachKandSportsguy is online now
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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
  #11  
Unread 10-20-2020, 03:53 PM
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No you can not. This might be of interest. Q&A: Can I Undo My Roth Conversion? (2020) – Marotta On Money
  #12  
Unread 10-20-2020, 06:32 PM
Stu from NYC Stu from NYC is offline
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Too much money involved to do anything other than talk to an expert.
  #13  
Unread 10-20-2020, 07:20 PM
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Quote:
Originally Posted by Boomer View Post
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
  #14  
Unread 10-20-2020, 07:48 PM
DON10E DON10E is offline
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Quote:
Originally Posted by DimondAngels View Post
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!

😉
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