What is the purpose of ROTH Conversions? Generally speaking, “Roth conversions allow taxpayers to pay ordinary income tax now on the retirement assets they convert in order to obtain the tax-free growth of the RothIRA.”
The amount converted is subject to the ordinary income tax that the taxpayer is subject on his regular income, however, the converted amount is not subjected to the 10% early distribution penalty, provided of course all the requirements are met. |