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Joe Jaspers, CFP®
Vice President, Wealth Management
Carolinas Telco Capital Advisors
Located at Carolinas Telco FCU
9813 South Blvd, Suite 101
Charlotte, NC 28273
Phone: 704-391-5600
Toll Free: 800-622-5305, ext. 2608
Fax: 704-556-1652
Email: joe.jaspers@lpl.com
July/August 2021
Trending Now: Roth IRA Rollovers
Tax-free withdrawals and no required minimum distributions (RMDs) at any age are two characteristics that make Roth individual retirement accounts (IRAs) popular with investors. Current relatively favorable tax rates have made rollovers from traditional IRAs an option to consider. But, as with any investment, it’s important not to rush into a rollover without first taking into account the possible effects of such a move.
IRAs in a Nutshell
Contributions to a traditional IRA are made before income taxes are taken out, allowing your savings to accumulate tax deferred until you withdraw the money, presumably at retirement. You must begin taking distributions from traditional IRAs and other tax-deferred retirement accounts once you reach age 72.*Alternatively, contributions to a Roth are made with after-tax dollars, so withdrawals of earnings are tax free after age 59½, as long as you’ve had the Roth IRA for five years. (Roth contributions can be withdrawn tax free at any time, but an early withdrawal penalty may apply.) And you are not required to take distributions during your lifetime, so, if you don’t need the money, you can pass along the Roth account to your heirs.
The Taxing Details
If you’re thinking of rolling over funds from a traditional IRA to a Roth IRA, make sure you have sufficient funds to pay the taxes on the amount you roll over—preferably without tapping the account. Keep in mind that the conversion could push you into a higher income tax bracket since that money will be taxed as income in the year you roll it over.If you’re enrolled in Medicare Part B, the income from converting a traditional IRA could also result in a high-income surcharge on your premium in a future year.
When a Rollover Might Make Sense
If you’ve experienced a drop in the value of your traditional IRA recently, rolling over the funds to a Roth IRA while the value of your investments is down may lower the tax hit.*Taxpayers born before June 30th, 1949 must still use age 70 1/2 to start taking required minimum distributions.
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Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Carolinas Telco FCU and Carolinas Telco Capital Advisors are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using Carolinas Telco Capital Advisors, and may also be employees of Carolinas Telco FCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of, Carolinas Telco FCU or Carolinas Telco Capital Advisors. Securities and insurance offered through LPL or its affiliates are:
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