My tax software also had me attach an explanation statement to line 4a of our Form 1040 indicating the recharacterization from Roth to Traditional -- date of recharacterization, amount recharacterized, amount transferred (recharacterization plus earnings/losses) and a short description indicating the reason (Excess Roth IRA contributions). To model this Other Expense: As an example, consider a 55 year old client that wishes to make a one-time conversion of $50,000 from their IRA into a Roth. The data entry is the same as described above, entering a withdrawal from the IRA and an addition to the Roth IRA. Perhaps you're pretty sure you'll actually be in a higher tax bracket when it comes time to withdraw the funds for some reason. How to do Roth Conversion Strategies in Tax Clarity. If you answer “yes” to all five questions, you’re an outstanding candidate. "Now Is the Best Time in History to Do a Roth Conversion," read the headline in one publication. Enter the full distribution (conversion and recharacterization amount) in, Gross Distribution. Contributions to a Roth IRA, in contrast, are made with after-tax dollars and are not tax deductible. Future Change 2: Age 56 and an amount of $0. 0, Webinar: Financial Planning Lessons Learned in 2020 to Help You Succeed in 2021, © 2021 MoneyTree Software. Go to the Other Expenses tab of the Expenses section. This is an excellent way to quickly show the long-term impact of a conversion strategy. Comprehensive financial planning software solutions for every client. Roth conversion strategies can also be modeled in Moneytree Plan’s powerful What-If. The Backdoor Roth IRA: Investing Rules of the Backroads Joe Elsasser, CFP, RHU, REBC developed Social Security Timing software for advisors in … The program pools tax-deferred retirement accounts with the same owner. The Roth IRA conversion and designated Roth 401k conversion media storm is in full swing. Solution Description. Keep It Simple Stupid; Advantages of the Spreadsheet 2). Enter the client’s age for the conversion, and the conversion amount as a negative monthly amount (this will create a withdrawal from the asset). on September 28, 2020. bu with the Roth IRA, there is generally no income tax on withdrawals as long as you’re older than age 59½ and have held the Roth IRA … Arielle O'Shea , Kevin Voigt October 23, 2020 So technically–your ROTH conversion was $15,000, but on the front of your 1040 return, in the taxable retirement funds section, it will read $20,000. Next, go to the client’s Roth IRA report (C11 for Ind. Illustrating a conversion of an IRA to a Roth IRA requires scheduling withdrawals from the IRA and additions to the Roth IRA. Free inflation adjusted Roth IRA calculator to estimate growth, tax savings, total return, and balance at retirement with the option to contribute regularly. In the Assets section, review the client’s Retirement Plans report (C10 for Individual 1, C10a for Individual 2). Enter the Taxable Amount. You end up in the same bottom line as making the contribution non-deductible and not pay tax on that part of the conversion. Learning. 2). more. Select the Roth IRA in the asset section. But you may face a tax bill in the year you convert. This will result in an addition to the asset. Roth IRA conversions are one of the most misunderstood topics in our industry today.. Since Aspire is a goals-based reporting module, the program will assume the individual can cover the additions to the Roth if they are working. If you convert your traditional IRA contribution to a Roth IRA quickly, you’ll have less time to accumulate earnings. Properly reflected in Prosper or Aspire projections a Roth conversion Strategies can also be modeled in Moneytree Plan s... … but there are income limits on a Roth IRA conversion and amount... 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