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Enter employer code: FC19

10. What We’ll Cover Today Let’s Review IRA Rules
Converting your IRA to Roth
Converting your 401(k) to Roth

11. Traditional IRAs – In the Old Days
deposit
pre-tax dollars
all dollars taxed when withdrawn
Max contribution $5,500
($6,500 if
age 50 or older)
The above summary is from sources believed to be reliable but cannot be guaranteed. Francis Investment Counsel does not provide tax or legal advice. Seek advice from qualified professionals.

12. Hold On – That’s Too Generous
Traditional
After-Tax
IRA
After-tax deposit
if income too high
Gains taxed when withdrawn
Max contribution $5,500
($6,500 if
age 50 or older)
The above summary is from sources believed to be reliable but cannot be guaranteed. Francis Investment Counsel does not provide tax or legal advice. Seek advice from qualified professionals.

13. Who Must Make After-tax Deposits to Traditional IRA?
Source: The above summary is from sources believed to be reliable but cannot be guaranteed. Francis Investment Counsel does not provide tax or legal advice. Seek advice from qualified professionals.

14. Given No Upfront Tax Break… Roth IRA May Be Better
Entire account tax-free when withdrawn*
After-tax deposit
*After age 59 ½
and five years
Max contribution $5,500
($6,500 if
age 50 or older)
The above summary is from sources believed to be reliable but cannot be guaranteed. Francis Investment Counsel does not provide tax or legal advice. Seek advice from qualified professionals.

15. Plus, Early Withdrawals from Roth are Less Painful
IRA
After-tax basis can be
withdrawn at any time
The above summary is from sources believed to be reliable but cannot be guaranteed. Francis Investment Counsel does not provide tax or legal advice. Seek advice from qualified professionals.

16. Just When You Think You’re On to Something
Source: above summary is from sources believed to be reliable but cannot be guaranteed. Francis Investment Counsel does not provide tax or legal advice. Seek advice from qualified professionals.

17. The “Backdoor”
Roth IRA

18. But You Can Convert to Roth
Conversions were only available if your income did not exceed $100,000
Thanks to the Taxpayer Relief Act of 2012 now everyone convert
But pre-tax amounts converted are considered taxable income in the year of conversion (no penalties apply)
The above summary is from sources believed to be reliable but cannot be guaranteed. Francis Investment Counsel does not provide tax or legal advice. Seek advice from qualified professionals.

19. In an after-tax traditional IRA ONLY the gains are taxable upon conversion!
The above summary is from sources believed to be reliable but cannot be guaranteed. Francis Investment Counsel does not provide tax or legal advice. Seek advice from qualified professionals.

20. Back Door Roth Example: Worker and spouse earn $220,000
Traditional
After-Tax
IRA
$5000
After-tax
deposit
Roth
IRA
Balance at conversion = $5,500
Only $500 is taxable!
The above summary is from sources believed to be reliable but cannot be guaranteed. Francis Investment Counsel does not provide tax or legal advice. Seek advice from qualified professionals.

21. IRS considers 52% of each dollar converted taxable
Be Aware of the Pro Rata Rule
Traditional
After-tax
IRA
$5000
After-tax
deposit
Roth
IRA
Balance at conversion = $10,500
IRS considers 52% of each dollar converted taxable
Existing
Pre-tax
IRA - $5000
The above summary is from sources believed to be reliable but cannot be guaranteed. Francis Investment Counsel does not provide tax or legal advice. Seek advice from qualified professionals.

22. Roth Conversions Allowed in Your 401(k) Too
Both your pre-tax account and matching account can be converted
Associated charges $50 per conversion
Can’t use the 401(k) to pay the taxes, unless you are age 59 ½ or older
The above summary is from sources believed to be reliable but cannot be guaranteed. Francis Investment Counsel does not provide tax or legal advice. Seek advice from qualified professionals.

23. Convert to Fill Up a Tax Bracket
Source: The above summary is from sources believed to be reliable but cannot be guaranteed. Francis Investment Counsel does not provide tax or legal advice. Seek advice from qualified professionals.

24. Standard Deductions Increase
$24,000
$12,700
$12,000
$6,350
2017
2017
2018
2018
Married filing jointly
Single
The above summary is from sources believed to be reliable but cannot be guaranteed. Francis Investment Counsel does not provide tax or legal advice. Seek advice from qualified professionals.

25. See Your
Tax Advisor
for the Math!