Group 1: Tax Strategies for Retirement Accounts - Roth IRA conversions are increasingly popular among retirees aiming to minimize tax burdens, but they may not be suitable for everyone [1][5] - Traditional retirement accounts like IRAs and 401(k)s allow contributions to be tax-deferred, with taxes applied upon withdrawal as regular income [2] - Roth accounts are funded with after-tax money, meaning no taxes are owed on earnings, gains, or withdrawals [3] Group 2: Roth Conversion Timing - Converting traditional retirement accounts to Roth accounts involves paying taxes upfront, which can be complex in terms of timing for tax efficiency [4] - Early retirees may not benefit from Roth conversions as much as assumed, according to insights from experts Sean Mullaney and Cody Garrett [5] Group 3: Small-Cap Stocks Performance - Small-cap stocks have outperformed the S&P 500 since the end of June, with the Russell 2000 index showing notable gains [7] - The Russell 2000 includes many unprofitable companies, while the S&P Small Cap 600 index is more selective, requiring profitability for inclusion [7] - Investment options for small-cap stocks include ETFs that track the Russell 2000 and S&P Small Cap 600 indices [8]

Core Points - The article discusses the rules surrounding Roth IRA conversions and the conditions under which individuals can withdraw earnings and principal without penalties [1][3][6] - It highlights two distinct five-year rules that may apply to Roth IRAs, which are independent of each other [3][8] Group 1: Roth Conversion Rules - Each Roth conversion has its own five-year waiting period that begins on January 1 of the year of conversion [6][7] - If an individual converts $50,000 on April 30, 2025, they must wait until January 1, 2030, to withdraw that amount without penalties [6] - Individuals under 59 ½ years old face a 10% early withdrawal penalty if they withdraw converted amounts before the five-year period ends [6][7] Group 2: Roth Contribution Rules - There is a separate five-year rule for Roth contributions, which states that if it has been less than five years since opening the first Roth IRA, earnings withdrawn are subject to income tax, even for those over 59 ½ [8] - Unlike conversions, this contribution rule only needs to be satisfied once [8]

Tax Report: It’s time to look at how Trump’s megabill affects Roth IRA conversions https://t.co/3E5uDbxeDS ...