I'll be doing another Partial Roth Conversion this year, I recommend it for anyone who is earning less this year than when they deferred their income into retirement plans.
The notion is simple. You take the tax bracket you are in, and compare it with your income for the year. For example, if you are filing Single, and earned $30K this year, you could 'top up' your income by rolling a partial amount over of $6,900. When you do this you receive a 1099-R from the Broker, and must pay taxes on the amount of the rollover at your income tax level.
IMPORTANT
Do not elect to pay taxes from the rollover itself - rollover the full amount (in this case $6900) and make an additional estimated tax payment if you think that this income will mean that you owe taxes.
Verbiage may differ, Fidelity for example would offer you:
Do you wish to withhold taxes (Yes/No) here is where you should elect no, and pay any difference you might have.
Below are the 2014 tax tables so that you can see what your 2014 earnings are, and if there is any gap between your current level and the next tier.
Single Tax Payers:
Married Filing Jointly
Head of Household
For more info on how this works -check out the post: Converting to a Roth IRA - Using Partial Transfers to Reduce Taxes
The notion is simple. You take the tax bracket you are in, and compare it with your income for the year. For example, if you are filing Single, and earned $30K this year, you could 'top up' your income by rolling a partial amount over of $6,900. When you do this you receive a 1099-R from the Broker, and must pay taxes on the amount of the rollover at your income tax level.
IMPORTANT
Do not elect to pay taxes from the rollover itself - rollover the full amount (in this case $6900) and make an additional estimated tax payment if you think that this income will mean that you owe taxes.
Verbiage may differ, Fidelity for example would offer you:
Do you wish to withhold taxes (Yes/No) here is where you should elect no, and pay any difference you might have.
Below are the 2014 tax tables so that you can see what your 2014 earnings are, and if there is any gap between your current level and the next tier.
Single Tax Payers:
Married Filing Jointly
Head of Household
For more info on how this works -check out the post: Converting to a Roth IRA - Using Partial Transfers to Reduce Taxes
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