A note on Roth conversions

Featured in a recent Slott Report on Roth IRAs posted May 16th were some of the top Roth conversion mistakes common today. These are mistakes advisors work to help clients avoid – ones that can sometimes be overlooked or just misunderstood. One to be aware of: the incorrect valuation of assets when doing a Roth conversion. As Beverly DeVeny and Jared Trexler noted, “Many tax scams are based on undervaluing assets. This is also true when it comes to Roth IRA conversions. A fair market value must be used for the asset converted. A common example is an annuity contract with riders. Such riders can increase the fair market value of the annuity contract, increasing the tax you will owe if you do a Roth conversion of the IRA annuity.” When considering a Roth conversion, be sure you are working with a professional that can help you avoid this or other common mistakes.

Roth vs. Traditional IRA… Which is better?

With tax season around the corner many contemplate funding their IRA or Roth IRA accounts.  Sometimes you may wonder which is better for you.  We thought this article may help you as you debate the differences and which might be best for your situation.  Contribution limits for 2012 remained level at $5,000 with an additional $1,000 available for those age 50 or older.  It may be helpful to know that in 2013 these limits increased slightly to $5,500 (age 49 or younger) and $6,500 (age 50 or older).  Also remember that Traditional IRAs must be established by the tax-filing deadline (without extensions) for the tax year to which your qualifying contribution(s) may apply.

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