Jul 20 (edited) in General discussion
The Strategic Roth Conversion Approach
🌟 The Strategic Roth Conversion Approach 🌟
Heard about Roth conversions? It is ONE of the great strategies to shift your money into tax-exempt bucket to build up your wealth. (Note: "Tax-exempt" is only for personal income tax. Unfortunately, as long as this bucket of money is still under your name, it WILL be subject to Estate Tax, or even inheritance tax if your heirs live in the state which this tax is levied). We will talk about those in another post.
🤔 Here's how to do it strategically:
Estimate Your Tax Situation 📝:
Start by evaluating your current and future tax scenarios.
The goal is to convert just enough that year to remain in your current tax bracket, avoiding a jump to a higher one. Yes. You HAVE TO pay tax on that amount dollar by dollar that year. Note, you don't need to write a check physically to anyone. But it will be added to the taxable income and your tax return will reflect the tax you pay for that amount. i.e. you have to pay tax on the entire amount to IRS.
For instance, if your taxable income is $80,000 and you're in the 24% tax bracket, you could convert $20,000 from your traditional IRA to a Roth IRA. This would incur $4,800 in taxes, but you'd stay within the 24% bracket. 📊 That $20,000 would then grow tax-free for life! 🌱💰(please reference the actual tax table; the numbers are for illustration purpose only)
Take control of your financial future with strategic planning! 💪📈
P. S. For education purpose only, Not CPA, no legal or tax advice.
#RothConversion #TaxPlanning #FinancialFreedom #KaizenWealthSolutions #TaxFreeGrowth #SmartInvesting
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The Strategic Roth Conversion Approach
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