How can I benefit from converting/partially converting to a Roth IRA?

• Legacy leverage
• No required distribution
• Tax diversification
• Protection from possible future tax increases
• Ability to re-characterize

How can I fund a Roth IRA?

There are two basic ways:

1. You can convert your Traditional IRA or any retirement plan from a previous employer (401(k), 403(b), 457(b), etc.) to a Roth IRA. (This includes a partial conversion as well.) This may be a taxable event. Consult a qualified tax professional for specific tax advice.
2. If you have a Modified Adjusted Gross Income of less than $120,000 (single)/$176,000 (joint), you can fund and contribute to a new Roth IRA by talking with your financial advisor. This is for 2009 only. In 2010 the married filing jointly contribution limit goes up to $177,000, single filers stay the same. 2010 Roth IRA rule only applies to converting to a Roth IRA, not contributing.

Learn more about how much you can contribute per year on Roth IRAs.

Am I eligible for a Roth IRA conversion/partial conversion?

Starting January 1, 2010, any person with any income level will be eligible to convert to a Roth IRA from a Traditional IRA or employer retirement plan (401(k), 403(b), 457(b), etc). Previously, only people who had a Modified Adjusted Gross Income of less than $100,000 were able to convert. This may be a taxable event. Consult a qualified tax professional for specific tax advice.

Which of my assets are eligible for conversion to a Roth IRA?

Assuming you meet the basic eligibility criteria for converting, your Traditional IRA assets may be converted to a Roth IRA. This includes contributions made to your Traditional IRAs under simplified employee pension (SEP) plans. SIMPLE IRA assets may also be converted to a Roth IRA as long as it has been at least two years since you first received a SIMPLE IRA contribution under the employer’s SIMPLE IRA plan.

You can also convert your qualifying employer retirement plans (401(k), 403(b), 457(b), etc).

What happens when I convert non-deductable Traditional IRA contributions verses qualified (e.g., 401(k), 457(b) 403(b), etc.) money?

Non-deductable Traditional IRA contributions: In the event you are converting after tax, you will be taxed only on the earnings of your account, since the contributions have already been taxed once.

Qualified: In the event you are converting qualified funds, you will be taxed on the full amount being converted (contributions and earnings).

Am I able to convert to a Roth IRA even if I do not have earned income?

Yes. You do not have to have earned income to be eligible to convert existing retirement plan savings to a Roth IRA.

Would a conversion or partial conversion fit into my overall retirement plan?

Converting should not be considered an all or nothing option. In fact for many people it actually makes sense to only convert a portion of their IRA savings to a Roth. The question becomes, how much should I convert? SecurePath by Transamerica can help — we look at your unique situation and help you determine the right conversion ratio to optimize your retirement savings.

Receive a complimentary Roth Conversion consultation by contacting a SecurePath^SM by Transamerica financial advisor at 866-248-9421 and find out how much of your Traditional IRA or qualified plan (if any) you may want to convert and that would make sense for your situation.

Learn more about how much you can contribute per year on Roth IRAs.