Roth IRA for pharmacists

[Dkpharm]

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Hey there, long time lurker first time poster! 😳
I wanted to probe some of the investors of the forums about how we as pharmacists can best go about participating in a Roth Ira. I know the govt allows a conversion of a regular Ira into a Roth.

Can I make a big lump sum convesion? Or would it be better to do four quarterly conversions?
Im under the impression you pay a tax on the earnings upon conversion....
But I digress...

Thoughts?
-dk

 

[All4MyDaughter]

Hey there, long time lurker first time poster! 😳
I wanted to probe some of the investors of the forums about how we as pharmacists can best go about participating in a Roth Ira. I know the govt allows a conversion of a regular Ira into a Roth.

Can I make a big lump sum convesion? Or would it be better to do four quarterly conversions?
Im under the impression you pay a tax on the earnings upon conversion....
But I digress...

Thoughts?
-dk

I'm converting an old retirement account to a Roth right now. You can do a lump sum (not sure if there is a max). I don't know what the tax advantage would be to doing it quarterly. They'll send you a 1099 at the end of the year and you have to pay the taxes.

 

[type b pharmD]

Hey there, long time lurker first time poster! 😳
I wanted to probe some of the investors of the forums about how we as pharmacists can best go about participating in a Roth Ira. I know the govt allows a conversion of a regular Ira into a Roth.

Can I make a big lump sum convesion? Or would it be better to do four quarterly conversions?
Im under the impression you pay a tax on the earnings upon conversion....
But I digress...

Thoughts?
-dk

roth ftw.

 

[pezdispenser]

For 2011 the AGI limit for contributing directly to a Roth phases out between $107k-122k for singles, and an average pharmacist's salary is in this range.

If you are over the limit, make a contribution to a traditional IRA first. You will not be able to deduct it because that phases out at an AGI of $56k-66k for singles. Then immediately convert it in one go to a Roth IRA. The income limit on converting traditional to Roth IRAs has been removed. Because your contribution was not deducted, it will not be taxed, and if you converted immediately there will be little to no earnings to be taxed.

If you already have deducted contributions in a traditional IRA, it will be more complicated. You cannot choose to convert only the nondeductible contribution you just made, even if it is in a separate account. You will have to prorate the conversion between your deducted and nondeductible amounts and pay tax on the deducted proportion.