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Ask The Expert: Converting to a Roth

Q: I am 61 years old. Am I able to convert pre tax dollars to a Roth IRA if I have no w-2 income? Thanks.
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A:

Converting pre-tax dollars to a Roth IRA essentially counts as income. For example, if you have a Traditional IRA or a 401k, those are funded with pre-tax dollars. When you convert to a Roth, that becomes income which you must pay taxes on. The advantage is that since you just paid taxes on those funds, all future withdrawls are now tax-free. This can be a great technique if you have no income in a given year and can take advantage of low tax rates.

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