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Roth conversion
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- 1Year-End Roth Conversion Delays Could Trigger Bigger Tax Bill●Convert $60,000 on Dec. 28 and the Custodian May Not Process It Until Jan. 3. It Then Counts for the New Year, and for a Retiree Going Back to Work Part-Time, Most of It Can Land at 22%
Financial publication 24/7 Wall St. warns that investors converting $60,000 to a Roth IRA late in December may not see their custodian process the transaction until early January, meaning it counts toward the new tax year. For retirees returning to part-time work, most of the converted amount could then be taxed at a 22% marginal rate instead of a lower bracket.
- 2Retirees Urged to Use $47,500 Tax-Free Conversion Before Year-End●A Retired Couple Who Hasn't Claimed Social Security Can Convert $47,500 Before Dec. 31 and Owe $0 Federal Tax. On Jan. 1 the Space Resets, and Whatever They Didn't Use Is Gone
A retirement planning article from 24/7 Wall St. explains that a retired couple who has not yet claimed Social Security can convert $47,500 from a traditional IRA to a Roth account before December 31 and owe nothing in federal tax, because their income stays below taxable thresholds. The unused conversion room resets on January 1, meaning the opportunity disappears if not used this year.