Ask Terry Questions Converting a regular Ira to a ROTH IRA

Converting a regular Ira to a ROTH IRA

By Terry Savage on March 02, 2015 | Financial Planning / Retirement

Dear; Terry I am sorry to bother you with my question and your time: I lost my job on 2009 and i rolled my 401k to a regular IRA… Now my question is. Can I roll it over to a ROTH IRA? One year from now i will retire.
Thanks again

Terry Says:  The simple answer is yes, you can CONVERT your IRA to a Roth IRA  (this is not a rollover).  BUT the details are critical.  If you do the conversion, you must pay ALL the income taxes that are due on this previously untaxed money (remember, both contributions and gains have not yet been taxed in your traditional IRA).  And that bill must be paid by April 15th of the year after you do the conversion.

And don’t plan to take money out of the new Roth to pay the taxes, because then you lose all the benefits of future tax-free growth on that account.  So you should have money set aside outside the Roth to pay the taxes.  And check with your tax advisor because this conversion could put you in a higher income bracket, and that could result in higher Medicare premiums, and perhaps other lost benefits.

Here’s a great link to the details at Fidelity:




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