ad341323 Advice from your Local Financial Professionals James R. Wallisch, CFP® | LPL Financial Advisor | James.wallisch@lpl.com Andrew J. Wallisch | LPL Financial Advisor | andrew.wallisch@lpl.com TRADITIONAL TO ROTH IRA CONVERSION: EXPLORING THE OPPORTUNITY Converting your IRA to a Roth IRA can make sense, but timing and tax consequences must be considered. Read more: There are a number of reasons to consider pursuing a Roth IRA (Individual Retirement Account) conversion, but most commonly they can be an excellent way to reduce tax liability in retirement. However, this financial maneuver is recorded as taxable income and it's necessary to take careful measures to avoid unexpectedly incurring a substantial FINANCIAL FC SERVICES tax liability. With a traditional IRA, your contributions are typically tax deductible, but any future withdrawals are subject to ordinary income tax. On the other hand, with a Roth IRA, you deposit funds that have already been taxed, making the money you later withdraw in retirement tax-free. A Roth conversion is the process of transferring assets from a traditional retirement account to a Roth retirement account, allowing you to pay income tax up front and withdraw the funds at a future date free of tax. Compared to traditional IRAs, Roth IRAs offer a number of advantages: -No Required Minimum Distributions (RMDs): unlike traditional IRA accounts, Roth IRA accounts are NOT subject to RMDs. You can choose to continue to leave assets in the Roth IRA, investing tax-free for your later years. -Tax-Free Growth: all investments in the account grow free from taxation. -Tax-Free Withdrawals: after age 59 V, you can generally make withdrawals without any tax consequence or penalty. -Effects on Social Security and Medicare: A rise in taxable income because of a conversion may alter your Social Security benefits and Medicare charges. -Adds tax diversification of retirement assets which allows for more flexibility to manage taxable income in retirement. -Many think taxes will be higher in the future given the government's budget deficit. While Roth IRA contributions are subject to certain restrictions and income limitations, there are none for facilitating Roth conversions. Before going through with a conversion though, you'll need to consider the timing, and make sure to evaluate today's tax bill compared to your future tax bills. That is what makes all the difference. It is very complex and individualized, so it's difficult to provide a generic yes or no answer since the optimum Roth conversion approach requires careful examination of your expenditures, income, goals, and other factors. Give us a call and see if a Roth conversion may right for you. LPL Financial 1090 Freeport Road, Suite 150, Pittsburgh, PA 15238 | (412) 967-9272 | foxchapelfinancialservices.com The views expressed represent the opinion of Fox Chapel Financial Services and are for informational purposes only. LPL Financial does not offer tax advice or services. Consult with your tax professional regarding your situation. Securities and advisory services offered through LPL Financial. A registered investment advisor, Member FINRA/SIPC. ad341323 Advice from your Local Financial Professionals James R. Wallisch , CFP® | LPL Financial Advisor | James.wallisch@lpl.com Andrew J. Wallisch | LPL Financial Advisor | andrew.wallisch@lpl.com TRADITIONAL TO ROTH IRA CONVERSION : EXPLORING THE OPPORTUNITY Converting your IRA to a Roth IRA can make sense , but timing and tax consequences must be considered . Read more : There are a number of reasons to consider pursuing a Roth IRA ( Individual Retirement Account ) conversion , but most commonly they can be an excellent way to reduce tax liability in retirement . However , this financial maneuver is recorded as taxable income and it's necessary to take careful measures to avoid unexpectedly incurring a substantial FINANCIAL FC SERVICES tax liability . With a traditional IRA , your contributions are typically tax deductible , but any future withdrawals are subject to ordinary income tax . On the other hand , with a Roth IRA , you deposit funds that have already been taxed , making the money you later withdraw in retirement tax - free . A Roth conversion is the process of transferring assets from a traditional retirement account to a Roth retirement account , allowing you to pay income tax up front and withdraw the funds at a future date free of tax . Compared to traditional IRAs , Roth IRAs offer a number of advantages : -No Required Minimum Distributions ( RMDs ) : unlike traditional IRA accounts , Roth IRA accounts are NOT subject to RMDs . You can choose to continue to leave assets in the Roth IRA , investing tax - free for your later years . -Tax - Free Growth : all investments in the account grow free from taxation . -Tax - Free Withdrawals : after age 59 V , you can generally make withdrawals without any tax consequence or penalty . -Effects on Social Security and Medicare : A rise in taxable income because of a conversion may alter your Social Security benefits and Medicare charges . -Adds tax diversification of retirement assets which allows for more flexibility to manage taxable income in retirement . -Many think taxes will be higher in the future given the government's budget deficit . While Roth IRA contributions are subject to certain restrictions and income limitations , there are none for facilitating Roth conversions . Before going through with a conversion though , you'll need to consider the timing , and make sure to evaluate today's tax bill compared to your future tax bills . That is what makes all the difference . It is very complex and individualized , so it's difficult to provide a generic yes or no answer since the optimum Roth conversion approach requires careful examination of your expenditures , income , goals , and other factors . Give us a call and see if a Roth conversion may right for you . LPL Financial 1090 Freeport Road , Suite 150 , Pittsburgh , PA 15238 | ( 412 ) 967-9272 | foxchapelfinancialservices.com The views expressed represent the opinion of Fox Chapel Financial Services and are for informational purposes only . LPL Financial does not offer tax advice or services . Consult with your tax professional regarding your situation . Securities and advisory services offered through LPL Financial . A registered investment advisor , Member FINRA / SIPC .