Planning Briefs
When One Roth IRA Is Not Enough
Published Monday, March 28, 2016 at: 7:00 AM EDT
If you've finally decided to pull the trigger on a Roth IRA conversion, the simplest approach is to transfer assets from your traditional IRAs into a single Roth account. But you might instead consider setting up multiple Roth accounts to help insulate your savings from fluctuating markets.
This strategy depends on the rules for Roth "recharacterizations," in which you reverse a conversion to put your money back in traditional IRAs. With multiple Roth IRAs, you can recharacterize selected accounts if particular investments go south.
With a conversion to a Roth IRA, you pay taxes now to avoid them later; most distributions you take after you've reached age 59½ from a Roth you've had for at least five years are 100% tax-free.
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