Are there tax pitfalls in making a Roth IRA conversion?
Because the amount a taxpayer converts is added to their taxable income, they should be careful it is not pushing them into a higher tax bracket during the conversion year. If it will trigger a higher tax bracket, they may want to consider making conversions over a few different years. • Will I have access to my retirement funds in a Roth IRA early if I need them? If converted amounts are withdrawn from a Roth IRA within five years, a 10-percent additional tax applies unless the IRA owner is older than 59½ or one of the early withdrawal exceptions apply. These include: distributions made to a beneficiary as a result of an account holder’s death; distributions made as a result of the individual being disabled; distributions that are part of a series of substantially equal periodic payments; or distributions used to pay for certain higher education expenses, first-time homebuyer expenses or medical insurance premiums for unemployed individuals. • Can I pay the Roth IRA conversion taxes f
