Traditional IRA to ROTH IRA!
With wild swings in the stock market over the past few years, changing a ROTH account back to a traditional IRA and then reconverting the account back to a ROTH may result in big tax savings. For example, if a taxpayer in the 25% tax bracket has a traditional IRA valued at $100,000 on day X and converts it to a ROTH, he will pay tax on the $100,000. Let’s say a month later the stock market has lost 10% and the value of the account is now $90,000. If the taxpayer chose to change the ROTH back to a traditional IRA, waited 30 days and then reconverted it back to a ROTH, assuming the account is still worth $90,000, the taxpayer would save $2,500 in taxes.
Stuart Steinberg, CPA, MBA has owned a strategic tax planning practice on the North Shore for 23 years. Please feel free to contact him anytime and let Erock Tax take care of you!Stuart Steinberg, CPA, MBA has owned a strategic tax planning practice on the North Shore for 23 years. Please feel free to contact him anytime and let Erock Tax take care of you!