If I have a tax-deferred 401(k). Can I convert it to a Roth IRA without paying the deferred taxes when I roll it over? -Tommy Generally, the answer here is no. There’s typically no method to totally dodge taxes on a Roth conversion. Eventually, Uncle Sam will come to collect on your tax-deferred retirement accounts – either when you execute a Roth conversion, withdraw funds or collect your required minimum distributions (RMDs). That said, your inability to totally dodge taxes doesn’t translate to an inab ...

Core Insights - Roth IRAs allow tax-free growth and withdrawals, making them an attractive option for retirement savings compared to traditional IRAs, which are subject to taxes upon withdrawal [3][6][18] - Roth conversions can help avoid required minimum distributions (RMDs) that start at age 73 for traditional IRAs, thus providing more control over taxable income in retirement [2][18] - Strategic planning, such as partial conversions and timing conversions during low-income years, can minimize tax liabilities associated with Roth conversions [9][18] Inheritance Planning - Heirs inheriting Roth IRAs can stretch tax-free distributions over their life expectancy, but some must empty the account within 10 years [1] Tax Implications - Converting funds from traditional IRAs or 401(k)s to Roth IRAs incurs income taxes on the rolled-over amount for that year [5][7] - For example, rolling over $720,000 could result in a tax bill of nearly $220,000 at the top marginal rate of 37% [12] Conversion Strategies - Partial conversions over multiple years can help manage tax brackets and reduce overall tax liability [9][13] - Utilizing non-retirement assets to pay taxes on conversions allows the full amount to grow tax-free in the Roth account [17] Financial Advisory - Consulting with a financial advisor is recommended to navigate the complexities of Roth conversions and to develop a tailored tax strategy [8][18][21]