Mechanics of Roth IRA Conversion

The process of converting funds from a traditional IRA to a Roth IRA involves affirmatively moving a chosen amount from one account to another, acknowledging the tax implications. This conversion can set up a Roth conversion ladder, allowing penalty-free and tax-free access to the money after five years. The mechanics of the Roth IRA conversion are not overly complex, and while some recommend doing it at the beginning of the year for extended tax-free growth, others prefer waiting till later in the year due to the irreversible nature of Roth conversions under current rules.

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