Stock Advisor returns as of 6/15/21
Robert Brokamp: This question is about rollover IRA conversion to a Roth IRA. “I am retired. Is the entire dollar amount in my rollover IRA pre-tax contribution plus all growth subject to income tax?”
The answer is yes. That’s the cost of doing a conversion. The money adds to your taxable income this year. Obviously, that also means you’ll pay foreign income taxes, but you also have to pay attention to other things that are determined by your income tax rates.
How much your social security is taxed? How much you’ll pay at Medicare premiums? Whether you’ll qualify for certain tax breaks? Many tax credits and other things are determined by your adjustable gross income.
If you’re not sure whether you should do a conversion, it certainly could make sense to talk to an accountant if you work with one just to let you know if you convert $50,000, let’s just say, how much is that going to increase your tax bill and is that also going to then affect other aspects of your finances?
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