"Whit" wrote:

- quote -

While you're under 59 1/2, if you withdraw converted funds before the
conversion has aged 5 years you'll owe the 10% premature distribution
penalty. Note that this is a different test than the 5 year test for
qualified Roth distributions.

- quote -

It certainly does look like such a time. As for estate planning, there's no
difference as to estate tax, and the income tax advantage to beneficiaries
of a Roth is basically the same as for you.

--
Phil Marti
Clarksburg, MD

--
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I'm thinking of taking advantage of some low income years and the depressed
value of my portfolio by doing some Roth conversions. The idea is to roll
my 401(k) over to a traditional IRA, then judiciously convert some amount
each year to Roth IRA and pay the taxes on it now while the values and my
income are both down. My question is, are there things I haven't thought
about with respect to Roth IRAs that I should take into consideration in my
planning? For example, are there issues around the ability to withdraw
money before age 59.5, treatment with respect to AGI limitations, estate
planning issues, upcoming tax law changes, and so on, that might lead me to
change my thinking here? It seems to me like a good time to get some money
out of my tax deferred accounts.

Issues about dealing with non-deductible contributions, form 8606, and such
were just dealt with in a different thread - no issues there. I'm also
aware of the general advantages/disadvantages of rolling the 401(k) to an
IRA, and how that should be done. I'm more interested in the planning
aspects of the conversion, just to be sure I'm not overlooking something.

Thanks,
Whit M.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >