Roth IRA Conversion

Roth. And Roll.

The rules on Roth IRAs changed in 2010. Federal limits on Roth conversions, which formerly prevented those earning $100,000 or more—whether filing singly or jointly—from converting to Roth IRAs, have been removed. Keep in mind that Roth contribution limits still apply. Read below to understand the full impact of this change.

Converting to a Roth IRA is not an “all or nothing” option. It may make sense for you to only convert a portion of your retirement accounts to a Roth IRA rather than the whole amount. Contact a Transamerica Retirement Management, Inc. financial advisor at 866-300-0028  to receive a complimentary Roth Conversion consultation and determine which, if any, might be appro- priate for your situation.

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

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. You can contribute to a new Roth IRA provided you meet the Modified Adjusted Gross Income (AGI) requirements outlined below. Contact a financial advisor with questions or assistance.
IF you have taxable compensation and your filing status is ... AND your modified AGI is ... THEN ...
married filing jointly or qualifying widow(er) less than $166,000 you can contribute up to $5,000 ($6,000 if you are age 50 or older) as explained under How Much Can Be Contributed.
at least $166,000 but less than $176,000 the amount you can contribute is reduced as explained under Contribution limit reduced.
$176,000 or more you cannot contribute to a Roth IRA.
married filing separately and you lived with your spouse at any time during the year zero (-0-) you can contribute up to $5,000 ($6,000 if you are age 50 or older) as explained under How Much Can Be Contributed.
more than zero (-0-) but less than $10,000 the amount you can contribute is reduced as explained under Contribution limit reduced.
$10,000 or more you cannot contribute to a Roth IRA.
single, head of household, or married filing separately and you did not live with your spouse at any time during the year less than $105,000 you can contribute up to $5,000 ($6,000 if you are age 50 or older) as explained under How Much Can Be Contributed.
at least $105,000 but less than $120,000 the amount you can contribute is reduced as explained under Contribution limit reduced.
$120,000 or more you cannot contribute to a Roth IRA.
** Source IRS, Roth IRA publication 590

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.

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).

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).

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

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? Transamerica Retirement Management, Inc. 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 Transamerica Retirement Management, Inc. financial advisor at 866-300-0028 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.

Who can I talk to about converting my Traditional IRA to a Roth IRA?

Contact a Transamerica Retirement Management, Inc. financial advisor at 866-300-0028 and receive a complimentary Roth Conversion consultation to see if you could benefit from converting or partially converting to a Roth IRA.

Our financial advisors do not offer tax advice. Please consult with your tax professional for guidance specific to your situation before making any tax decisions.

866-300-0028 | HELPING PEOPLE RETIRE
TRM34766