ACCOUNT TYPE

Roth Conversions

A Roth IRA affords a unique opportunity to enjoy tax-free distributions while investing in the alternative assets of your choosing.

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ROTH CONVERSION BENEFITS

What should you know about Roth conversions?

 By paying taxes on your contributions and waiting an appropriate amount of time, distributions of Roth IRA earnings can be 100% tax free. Roth conversions allow you to “switch” your account type from Traditional to Roth by adjusting the tax situation of your plan. 

There are no limits on the number of Roth conversions you may execute, nor are there limits on the dollar amounts you may convert.

LONG-TERM STRATEGY SHIFT

Move your pre-tax cash and assets to a post-tax status. Pay taxes on the converted balance now to enjoy qualified tax-free distributions later.

HEDGE AGAINST RATE CHANGES

Income tax brackets are always subject to change. Regardless of your current tax rate, Roth conversions present the opportunity to pay zero taxes down the road.

PROMOTE GENERATIONAL WEALTH

Without the burden of required minimum distributions, your self-directed Roth IRA can continue to grow well into your retirement years.

ROTH CONVERSIONS

Other Key Considerations

GETTING STARTED

How do you fund your Roth IRA account?

In-Kind Conversions

You’re under no obligation to liquidate your pre-tax assets prior to conversion. Assets may be converted in kind through retitling or other simple transfer procedures. The current fair market value of your converted assets will be reported as the taxable amount.

For example, if you convert a 1 oz. gold bar with a spot price of $1,300, that’s how much will be added to your income for tax purposes even though the physical item was never sold.

Qualified Distributions

You must wait five years before distributing converted cash or assets if you want to garner the full tax-free benefits of Roth IRA withdrawals. This waiting period applies even if you’re already 59½ years old and it’s been at least five years since your first Roth contribution.

Re-Characterizations

Until recently, self-directed investors who converted their accounts had the option of re-characterizing their holdings back to a pre-tax status. This is no longer the case per the Tax Cuts and Jobs Act of 2017.

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EDUCATION CENTER

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