Craig Wear, CFP®Craig Wear, CFP® | Expert in Roth Conversions & Tax-Efficient Retirement Strategies for IRA Millionaires

What Are Roth IRA Conversions

4 Jun 2024 · 1 min

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Craig Wear explains the difference between Roth contributions and conversions. Contributions are after-tax deposits with annual limits. Conversions move pre-tax retirement funds into a Roth and get taxed immediately, with no annual limit on how much you can convert.

Questions this video answers

An amount taken from income and put into a Roth, subject to annual contribution limits.

Taking money from an existing IRA or 401(k) (pre‑tax account) and moving it to a Roth account while paying taxes on the converted amount.

No — the speaker states there is currently no limitation on the amount you can convert each year (so long as you pay the tax).

Chapters

A lot of people confuse Roth contributions with Roth conversions, and contributions are the amount that you take from your income and you put into a Roth, and they're limited every year by how much you can put in. In fact, you can make enough money that you can't even do a Roth. A conversion, on the other hand, is the act of taking money from an existing IRA or 401k account, some pre tax account, and moving it over to a Roth account and pay taxes along the way. There's no limitation on the amount of money that you can convert each year, because currently there are no stipulations, no challenges. As long as you're willing to pay the tax, you're good to go.