Health
IRA Choices: Evaluating Online
A survey says 65 percent of Americans holding traditional or rollover Individual Retirement Accounts are aware of the tax effect of converting to a Roth IRA, but only half are aware of the Dec. 31 deadline.
Fidelity Investments, sponsor of the survey, is offering an online IRA Evaluator at its Web site to determine whether the tax benefits of converting from a traditional IRA to a Roth IRA may apply in the case of individual consumers.
Investors who convert their IRA assets to a Roth IRA this year can take advantage of a one-time tax benefit -- the ability to spread the income generated by the conversion over four years. The taxable amount of any conversion will be included in income in equal parts over four years, helping to minimize the tax impact.
Fidelity spokeswoman Deborah Kemp says the Roth IRA offers eligible investors the potential for tax-free earnings, making it an attractive way to build assets for retirement. Anyone with adjusted gross income of $100,000 or less, for single or joint filers, is eligible to convert an existing IRA to a Roth IRA.
Any future earnings and qualified withdrawals will be tax-free on a Roth IRA provided certain requirements are met; however, taxes will be owed on earnings, as well as deductible contributions that are converted from a traditional IRA.
Fidelity Investments, sponsor of the survey, is offering an online IRA Evaluator at its Web site to determine whether the tax benefits of converting from a traditional IRA to a Roth IRA may apply in the case of individual consumers.
Investors who convert their IRA assets to a Roth IRA this year can take advantage of a one-time tax benefit -- the ability to spread the income generated by the conversion over four years. The taxable amount of any conversion will be included in income in equal parts over four years, helping to minimize the tax impact.
Fidelity spokeswoman Deborah Kemp says the Roth IRA offers eligible investors the potential for tax-free earnings, making it an attractive way to build assets for retirement. Anyone with adjusted gross income of $100,000 or less, for single or joint filers, is eligible to convert an existing IRA to a Roth IRA.
Any future earnings and qualified withdrawals will be tax-free on a Roth IRA provided certain requirements are met; however, taxes will be owed on earnings, as well as deductible contributions that are converted from a traditional IRA.
