Converting Roth to annuity?
I have traditional 401k IRAs. However, I also have $30k in an employer Roth account. I’m 63 and plan to retire at 67. At 65 I have a pension that will pay $765.21 monthly or a lump sum of $146,050. I was thinking of rolling the lump sum into my Roth account. If I do that what are the tax implications?
Then at 67 I would like to convert this into an annuity to supplement my 401k and social security.
Does that make sense? Am I avoiding taxes that way at least on the annuity converted from Roth?
Thanks,
Terry Says
You have it all wrong — and I don’t know where to start!
1. You need to make a decision about whether to take the $765/monthly for life — or invest the lump sum. A professional needs to make this calculation because at first glance the lump sum seems way too low to me!
2. You can’t roll a pension distribution into a Roth IRA. period.
3. Depending on the terms of that pension payout, you may not be able to roll it into a tax-sheltered account of any type, so someone needs to review those terms.
4. A fixed annuity for life may seem like a good idea now, but at only 35 inflation, the value of that monthly check will be cut in half in 25 years!
You need help on a personal level from a fee-only financial planner who is a FIDUCIARY — not trying to sell you something. Please go to www.Wealthramp.com to find a planner you can trust.
