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It makes all pre-tax contributions and earnings taxable during the year of the conversion.
In the future, qualified withdrawals from the Roth IRA will be tax-free.
If you are planning to retire abroad, consider cross-border tax implications.
Zemelman recommended spreading the conversions across multiple years to avoid higher tax brackets while minimizing tax liability.
Its beneficial for legacy planning, as Roth IRAs pass tax-free to heirs, Zemelman said.
Converting funds before retiring abroad can avoid unfavorable or double-taxation in some countries.
Employees pay taxes on the converted amount.
These considerations should be part of an overall financial plan to ensure the conversion aligns with your broader goals.
Typically, tax mitigation for these types of conversions is around 42 cents on the dollar.
Your location can greatly affect your ordinary income as well as your earned income.
Its crucial to understand your states tax policies and factor them into your planning, Bennett said.
Caitlyn Moorheadcontributed to the reporting for this article.
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