I Have $1.5 Million in an IRA at 62 – Evaluating the Roth IRA Strategy to Avoid RMDs

Friday, 16 August 2024, 11:00

I have $1.5 million in an IRA at 62. Should I move $150K yearly to a Roth to avoid RMDs? This article explores strategic insights on retirement funds.
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I Have $1.5 Million in an IRA at 62 – Evaluating the Roth IRA Strategy to Avoid RMDs

Exploring the IRA to Roth Conversion Strategy

With $1.5 million in an IRA at 62, the question arises: is it wise to transition $150K annually to a Roth IRA to bypass required minimum distributions (RMDs)? Understanding the benefits of this move could significantly impact your retirement financial strategy.

Benefits of Moving to a Roth

Shifting funds from an IRA to a Roth IRA presents several advantages, including tax-free growth and withdrawals in retirement. If you envision a longer retirement, this strategy may serve you well.

  • Avoid RMDs: Roth IRAs do not have mandatory withdrawals, enhancing your control over retirement funds.
  • Tax Benefits: Paying taxes now could lead to substantial savings in the long run, especially if you face higher tax rates in the future.

Potential Drawbacks and Considerations

However, there are considerations to weigh before making such a move.

  1. Current Tax Impact: Converting IRA funds to Roth may trigger a significant tax bill in the conversion year.
  2. Market Volatility: Potential market fluctuations can affect the value of converted funds.

This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.


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