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Converting from a Traditional IRA to a Roth IRA

Eligibility

You may convert all or part of your Traditional IRA into a Roth IRA assuming you meet the following requirements:

  • If married, you file a joint tax return

Assets converted to a Roth IRA are subject to limitations and requirements, these include:

  • Assets converted must remain in the Roth IRA for five years before they can be withdrawn without penalty. To simplify the identification of converted assets, it is encouraged that you establish a separate Roth IRA for converted assets.
  • You may not contribute to a Roth IRA if your AGI is greater than $129,000 (single) or $191,000 (joint).

Tax Treatment

Your conversion counts as a Traditional IRA distribution in the year it is completed, and as such is subject to ordinary income taxes. Paying income taxes reduces your assets, which could lessen the burden of estate taxes later.