Word: taxingly
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Dates: during 1990-1999
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Start with estate planning. By converting an old IRA to a Roth, you must pay some immediate tax, but you do not have to start withdrawing money after age 70 1/2, as with an old IRA. So you can let it keep growing tax free as long as you live. It might even pay for your heirs to pick up the tax bill on the conversion, if they can afford it and you can't. The savings are that dramatic over long periods of time...
...will be allowed to convert an existing IRA to a Roth, and you can wait until you file your tax return to revert to the old IRA penalty free. That means that if you expect to be just under the income limit, you can convert now without fear of stiff penalties should you find that you miscalculated...
...first you must have a Roth to draw upon, and that's why the changes mentioned above are so important. They encourage people already retired or with the highest eligible incomes to set up a Roth. Some, though, might need to "manage" their income for at least one tax year to get it low enough to allow conversion...
Saving for a first home? As long as you've held a Roth for five years, you can withdraw as much as $10,000 penalty free and tax free at any age to make such a purchase. Early withdrawal is permitted for education too, but the investment gains are taxed. Still, if you are an older parent or a grandparent, you can use Roth withdrawals to pay for college, and it does not diminish your ability to make gifts of up to $10,000 per person per year...
...ready if it returns. Last week the government introduced a new class of affordable, inflation-indexed savings bonds to protect investors even if the cost of living is ballooning. Interest on the bonds, which debut Sept. 1 in denominations ranging from $50 to $10,000, will be tax deferred until cashed in and may be tax exempt if used to help fund college or other higher learning...