401k to Roth in 2010
Next year it is possible to convert 401 to IRA then to Roth. What if I want to then make a small child the beneficiary of the Roth (I withdraw nothing during my lifetime) and thereby remove from my estate. I will have to pay the tax during the conversion from "consumption" for 2010 and reduce my "income" from the 401k or IRA etc. I also have pension income and other liquid assets . . . so how do I set things up to see how much my "consumption" will decrease in a convert-gift environment versus consumping everything myself?
RTR
RSS
There's a case study that goes through this:
http://www.esplanner.com/case-convert-your-ira-roth
Best,
Dick Munroe
Unless I'm misreading that case study, it doesn't appear to factor in the loss of potential investment money due to the tax that had to be paid on the Roth conversion. Had the couple not converted to a Roth IRA but rather taken the money that would have otherwise gone to pay the tax on that conversion and invested it instead, might they have broken even against the Roth conversion, or perhaps actually come out a bit ahead?
Hi, Yes, your case is not handled by our case study. You want to take out money from your regular IRA, pay taxes on it and then put it in a Roth and never spend it. The easiest way to do this is just to enter the withdraw from the regular IRA as a taxable special receipt and NOT enter the money you put into the Roth as a Roth contribution. Instead, enter it as a non-tax related special expenditure. This way the program will know this money is gone with respect to helping support your own future consumption. Please call me at 617 834-2148 if this isn't clear. best, Larry
Doesn't he have to make a Roth contribution in order to get the net worth figures right?
Best,
Dick Munroe