Will My Roth IRA Conversion Be Penalty Free?
Converting a portion of an IRA to a Roth IRA is a complex process that involves many moving parts. Unintended consequences can result if the strategy is not properly analyzed or handled, including a possible impact on Medicare premiums two years after the conversion.
To help make the analysis easier, we have created the “Will My Roth IRA Conversion Be Penalty Free?” flowchart. It addresses common issues that you may encounter when doing a Roth conversion, including:
Implications for IRAs with after-tax contributions
Pro-rata and aggregation rules
Simple IRA rules
Medicare Part B and Part D surcharge impact
Application of the 5-Year Rule
RMD coordination issues
Robert J. Pyle, CFP®, CFA, AEP® founded Diversified Asset Management, Inc., in 1996 to provide personalized, comprehensive wealth management services to successful individuals, families, single women, and business owners. His specialty is addressing the complex financial needs of self-employed professionals, corporate executives, and small-business owners. Our disclosure can be found here. The views, opinion, information, and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc. Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting, or tax advice.