I'm 65 With $750k in an IRA and Already Taking Social Security. Is a Roth Conversion Still an Option?

Core Insights - The article discusses the feasibility and implications of converting a traditional IRA into a Roth IRA for individuals aged 65 and older, emphasizing that there are no legal restrictions based on age or income [2] - It highlights the tax implications and benefits of Roth conversions, particularly the potential for tax-free withdrawals in retirement [3][4] Group 1: Roth Conversion Basics - A Roth IRA conversion involves transferring funds from a traditional IRA to a Roth IRA, requiring the payment of income tax on the converted amount now, but allowing for tax-free withdrawals in retirement [3] - Traditional IRAs are subject to required minimum distributions (RMDs) starting at age 73, which can increase tax liabilities in retirement, while Roth IRAs do not have RMDs [4] Group 2: Timing Considerations - The timing of a Roth conversion is crucial; converting sooner allows for more years of tax-free growth in the Roth account [7] - Converting a large IRA can push individuals into higher tax brackets, potentially incurring a top marginal tax rate of 37% on the conversion amount [8] - Gradual conversions can help manage tax liabilities by spreading the income increase over several years, thus avoiding the top marginal tax rate [9] Group 3: Withdrawal Rules - Funds from a Roth IRA cannot be withdrawn without penalty within five years of conversion, and each gradual conversion restarts the five-year rule for that portion [10]