On Sunday, April 26, 2015 at 11:02:53 AM UTC-4, Leon wrote:
On 4/24/2015 10:03 PM, DerbyDad03 wrote:
On Friday, April 24, 2015 at 3:06:27 PM UTC-4, Leon wrote:
On 4/24/2015 1:13 PM, dadiOH wrote:
DerbyDad03 wrote:
On Thursday, April 23, 2015 at 4:44:58 PM UTC-4, dadiOH wrote:
DerbyDad03 wrote:
To be clear, instead of "replaced within 60 calendars days"
I should have said "deposited into a qualified retirement
account held by the same individual within 60 calendars
days".
Since the 60 day rule was put into place to facilitate
rollovers, there is no stipulation that the funds must go
back into the same account they were withdrawn from, they
just need to go back into a qualified retirement account
owned by the same individual.
I'm guessing that a Roth IRA doesn't qualify as a "qualified
retirement account"?
A Roth is a qualified retirement account. If I said something
that made you think otherwise, I apologize.
What made you ask that question?
The business about being able to transfer from one qualified
account to another.
If one can transfer a regular IRA, funded with pre-tax dollars
which are taxable when withdrawn or distributed, to a Roth IRA,
which is funded with post-tax dollars which are NOT taxed when
distributed or withdrawn, it seems to me there is a loop hole.
IME, the IRS really frowns on loop holes but if this exists, I
want in on it 
If you remove money from a traditional IRA and move it to a Roth
IRA you have to do a "conversion". Essentially the conversion
allows you to move money into a ROTH in excess of amounts normally
allowed per year however the amount converted adds to your yearly
income and you pay taxes on that money and perhaps at a higher rate
if the amount puts you in a higher tax bracket.
http://www.rothira.com/roth-ira-conversion-rules
Another reason to do Roth conversions is to reduce the amount of
money in your traditional IRA's so that your RMD will be lower once
you reach 70 1/2.
IMHO the only drawback to a RMD is that you have to pay taxes on that
amount which is being withdrawn. Converting means you will pay those
taxes earlier. Converting does not mean you will get out of paying
taxes.
I never said a conversion gets you out of paying taxes
Hopefully if you have done your projections and calculations
correctly you will pay less taxes in the long run by converting.
That is exactly what I said. By converting enough assets at a lower tax rate early on, you can sometimes avoid ending up in a higher tax bracket once you are forced to take your RMD. Since the RMD is based on the value of your IRA's at the end of each year, reducing the amount in your IRA's reduces your RMD.
Converting would make more since if Roth investments loose value during
a down turn in the market. You essentially still own the same amount of
shares and or funds but since they are less valuable they would be taxed
less during the conversion.
The only way to pay "less" taxes during a conversion is to convert fewer dollars. In my experience, Roth conversions are typically done based on a dollar amount, and then the number of shares to move is calculated to get as close to that dollar amount as possible. When a specific dollar amount is converted, it's true that you can convert more shares in a down market, but it doesn't change the taxes due. A $30K conversion is a $30K conversion whether you move 1 "high priced" share or 100 "low priced" shares. You still get taxed on $30K of income.
In fact, if the market goes down in the year *after* the conversion, it often makes sense to do a recharacterization and "undo" the conversion. There is no sense in paying taxes on a $30K conversion if the converted assets are only worth $15K. That's one of the reasons the IRS allows you to recharacterize the assets up until October 15th of the following year.