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As we approach the end of 2020 we consider the impact that the US president-elect Biden will have and look at some important year-end planning points to consider for US taxpayers living outside the US. … Read more
The CARES Act enacted by the US Congress on 27 March 2020 is an emergency package in response to the COVID-19 pandemic. … Read more
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Converting your traditional IRA to a Roth IRA will for some taxpayers, create long-term tax benefits, as generally, subsequent withdrawals are not taxable, and no minimum distribution is required each year after reaching age 70 ½ (unlike for traditional IRAs). Conversions are taxable in the US at ordinary income tax rates and so will create a tax charge for 2019 that must be met by other sources of cash.
However, given the flexibility that a Roth may bring, taxpayers who are more suited to a Roth IRA from an investment perspective may wish to consider making the conversion now. Where contributions into the 401(k) plan or traditional IRA also involve a period of foreign service, available foreign tax credits may be used to reduce the liability. No NIIT (Net Investment Income Tax) is due on any distribution, conversion or rollover to/from a Roth IRA account.
You may want to consider transferring your traditional IRA/401(k) plan into a Roth IRA before the end of 2019.
Please fill out the form below if you have any questions.
