James Royal, Ph.D. | Bankrate.com (TNS)
A Roth IRA is the best retirement account around, according to many experts, and it offers huge benefits such as tax-free income and the ability to leave tax-free money to heirs. Plus, because of its tax-free status, a Roth IRA gives you flexibility when it comes to taking retirement income.
But what if you have another retirement plan? The good news is that you can convert plans such as a 401(k) or traditional IRA to a Roth IRA and take advantage of its range of benefits.
“Converting to a Roth can be a great way to take advantage of historically lower tax rates and establish a tax-free retirement,” says Eva Victor, senior director of high-net-worth wealth planning at Northwestern Mutual. “Once you have a Roth IRA, it can produce tax-free income for years, even decades.”
Here’s how to use a Roth IRA conversion to set up tax-free income for your retirement.
What is a Roth IRA?
A Roth IRA is a tax-advantaged retirement account. With a Roth IRA, you deposit after-tax money, can invest in a range of assets and withdraw the money tax-free after age 59 1/2. Tax-free withdrawals are the biggest perk, but the Roth IRA offers others. read more