posible ira to roth convertion.
ME AND MY WIFE ARE IN OUR 40’S WE BOTH DONT HAVE A PENTION ONLY IRA’S. MY WORK ONE IS A ROTH WITH EMPLOYEE MATCH AT 4.5%. MY WIFES JOB DOESNT OFFER ONE. HER OLD JOB IRA IS NOT ROTH SHOULD WE CONVERT THE WHOLE IRA TO ROTH AND PAY WITH THE ACCOUNT FUNDS FOR TAXES AND 10% FEE? ITS ABOUT 35K. WE DONT HAVE THE MONEY TO PAY THE TAX OUT OF POCKET. . A FINACIAL ADVISER SAID WE ARE ON TRACK TO BE VERY SHORT ON RETIREMENT. THANKS STEVE.
Terry Says
Well, for starters, there is no penalty for converting a traditional IRA to a Roth IRA for those under 59-1/2. ONLY if you take any of the money out before holding it for 5 years would you be subject to the 10% penalty (and ordinary income taxes on any GAINs– not the original contribution amount).
But where is her IRA held — at a brokerage firm? I would suggest you contact Fidelity or Vanguard and have them do a direct rollover of this IRA, and then do the conversion. You’ll get the lowest cost and broadest selection of investment choices.
Keep saving. You’re at least 30 years from retirement. And if you each put $2,000 a year in your IRA, and average the historical 10% return of the stock market, you’ll each have nearly a half a million dollars at retirement!
