Roth Conversion Strategy to Avoid Required Minimum Distributions
- 1Savers must meet Required Minimum Distributions (RMD) starting at age 73 or 75 depending on their birth year.
- 2Instead of converting an example Roth conversion amount of $850,000 all at once, the process is spread over 5 or 6 years.
- 3An example tax bill of $15,000 from the Roth conversion is paid using external funds rather than retirement funds.
So what's the key point?
There comes a time when people must take mandatory withdrawals from their retirement funds as they age. Spreading out the conversion of $850,000 over several years instead of doing it all at once can help reduce the tax burden.
Source The Motley Fool +1 · View original ↗
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