Hello Bogleheads!
My partner recently found they had some money floating in an old traditional IRA (money market) and would like to move it into a Roth IRA on Vanguard into a fund. Would it make the most financial sense to move the money from the traditional IRA on the old brokerage into a traditional IRA on Vanguard and then convert the traditional IRA into a Roth? Or would it be easier to just keep a traditional IRA and also have a Roth IRA separately.
Thank you so much!
Better to transfer into Roth IRA or keep traditional IRA?
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Re: Better to transfer into Roth IRA or keep traditional IRA?
It depends.
What is your tax bracket? If you transfer the traditional IRA into a Roth IRA, you have to pay taxes on the entire amount now as if you earned it all this year. Then you don't have to pay taxes when you withdraw the money after age 59.5.
What is your tax bracket? If you transfer the traditional IRA into a Roth IRA, you have to pay taxes on the entire amount now as if you earned it all this year. Then you don't have to pay taxes when you withdraw the money after age 59.5.
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- Posts: 53
- Joined: Tue Jul 18, 2017 10:36 am
Re: Better to transfer into Roth IRA or keep traditional IRA?
Thank you for the reply! They are in the 22% bracket and will likely be in a larger bracket in the future.
Re: Better to transfer into Roth IRA or keep traditional IRA?
In that case, converting it to a Roth is probably a wise move as long as you can afford the tax bill for this year.sociologydude76 wrote: ↑Sun Apr 18, 2021 10:57 pm Thank you for the reply! They are in the 22% bracket and will likely be in a larger bracket in the future.
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- Posts: 53
- Joined: Tue Jul 18, 2017 10:36 am
Re: Better to transfer into Roth IRA or keep traditional IRA?
Okay thank you!