Roth IRA Conversions

With the lure of tax-free distributions, Roth IRAs have become popular retirement savings vehicles. According to the 2017 Investment Company Fact Book, about 17.4% of U.S. households owned Roth IRAs in 2016. One way to fund a Roth IRA is to convert some or all of your IRA or retirement plan money to a Roth IRA.

Roth IRAs — background

There are three ways to fund a Roth IRA — you can contribute directly, you can convert all or part of a traditional IRA to a Roth IRA, or you can roll funds over from an eligible employer retirement plan.

In general, you can contribute up to $5,500 to an IRA (traditional, Roth, or a combination of both) in 2018 ($6,500 if you'll be age 50 or older by December 31). However, your ability to make annual contributions may be limited (or eliminated) depending on your income level ("modified adjusted gross income," or MAGI)

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