G&G Associates Tax & Financial Consulting
What the Roth is Going On?
Hotep G&G Readers,
It seems to be all the rage in retirement planning over converting your
Traditional IRA into a Roth IRA, that is. This year there are some new
rules that make it beneficial for many people to make the conversion.
In today’s newsletter I’ll explore the new rules; look at some of the pros and cons of such a change; and explain the process for converting your Traditional IRA if you do decide to make the switch.
I suggest consulting with your tax advisor or financial professional before you do. If you lack either, surely give G&G Associates a call and we’ll be glad to help you. But let me state up front that I write as an investor with both Traditional and Roth IRAs and a grave concern about the future.
New Rules for 2010
In years past, if a taxpayer had over $100,000 of income, he was not
allowed to convert his Traditional IRA to a Roth. But Congress changed
the rules for 2010 and the income limits no longer exist. Thanks to the
2006 Tax Increase Prevention and Reconciliation Act (TIPRA), anyone can
convert their Traditional IRA to a Roth IRA. But just because you can
doesn’t mean you should.
The hook pulling people towards the conversion is the taxes they will or
won’t have to pay in the future. Roth IRA rules state that while
you still pay taxes on the money going into the account, these funds will
not only be allowed to grow tax-free; under current law when you begin
withdrawals those funds will also be tax-free.
In addition, there are no Required Minimum Distributions (RMDs) in a Roth,
as with a Traditional IRA. In fact you are not required to ever withdraw
any funds. If you wish, you can leave them intact and, upon your death,
they will pass tax-free to your heirs. If you do not need the funds to
maintain your own standard of living, you might discuss this option with
your estate planner.
The biggest disadvantage of converting a Traditional IRA into a Roth IRA
is the taxes you must pay when you do so. Since you were able to take a
tax deduction when you made the original contribution, and have not paid
any taxes on the gains, Uncle Sam wants his pound of flesh when you
convert to a Roth IRA. If you don’t have extra funds to pay the tax
and need to withdraw some of your IRA money to pay them, you will
experience an additional 10% penalty if you make a withdrawal before the
age of 59 1/2. The IRS does give you the option to pay the tax through
your 2012 tax filing. Again, discuss with your financial professional if this
option is right for you.
Now, if you had a Home Based or Small Business, you could easily avoid this problem or at least minimize the taxes owed. If you have any questions about this, feel free to contact me and I can show you how.
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Afterwards, give me a call and I’ll show you how to implement this strategy.
Many of you have undoubtedly heard some of the rumors and rumblings in
Washington about changing the rules for IRAs. There has been talk about
requiring that IRA funds be invested in Treasury bonds (for your own
protection, of course…more info on this next week), as well as other, even more disturbing, suggestions.
While we can’t know what Congress may or may not do, we must remain vigilant and be ready to protect our investments, no matter what or who affects them. You can count on us at G&G Associates to do our part to keep you informed.
Precious Metals IRA
For those of you who aren’t aware of it, recent changes in the rules
mean that gold, silver and platinum can be held in an IRA account. Now, what if you had bought Gold & Silver when I first told you back in 2007? Well, your investment account would be looking really good right about now. You can have Precious metals in your account whether it is a Traditional or a Roth IRA.
Not only can you hold physical metals of a proscribed fineness, but Perth Mint Certificates as well. This is because the gold, silver and platinum held at The Mint meet the fineness requirements. Another plus of Perth Mint Certificates is
that they allow you to avoid storage fees charged by IRA Trustees for
physical bars and coins.
You can also transfer existing IRAs, 401Ks, and 403Bs into a Precious
Metals IRA. But please note: The law requires that any precious metals
held in an IRA be done through an IRA Trustee; you as the account holder
cannot hold the precious metals yourself.
If you would like information about opening an IRA account to hold precious metals, please go to www.gngassociates.net and send me an email to set up a consultation. I’ll get back to you promptly, with more information on the rules and requirements to put precious metals in your IRA.
Converting Current Precious Metals IRAs
For those of you who have precious metals in your IRA, including coins,
bars or certificates, the conversion process is surprisingly easy. For
physical metals stored by your IRA Trustee, you should be able to open a
new account and have the metals transferred into it.
If you decide a conversion is the right choice for you, you should contact your
IRA Trustee to get the necessary paperwork and find out how best to
Whether in a Traditional or a Roth IRA, physical metals I strongly recommend that you consider the role precious metals should play in your retirement planning. Ask yourself how much of your precious savings you want denominated in dollars? And how much in a proven store of value, such as gold, silver and platinum?
When you are ready to move forward, or if you simply have a question about
how to proceed, know that your friends at G&G Associates are here to help you.
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Until the next time!
Asante Sana (Thanks)
Tax & Financial Consultant, RFC
866-361-3872 toll free fax
"Your mind is like a parachute, it only works when it is open."
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