When you turn 59 and a half years old, you'll be able to withdraw funds from your traditional IRA without restrictions or penalties. If you convert a traditional IRA to a Roth IRA, you must pay taxes for the conversion, but you'll never have to worry about paying taxes on that IRA again for eligible retirees, even if future tax rates are higher. The other time you risk receiving a tax penalty for withdrawing money early is when you transfer money from one IRA to another qualified IRA. If you find yourself in a lower than usual income tax bracket in a year, you may want to transfer funds from a traditional IRA to a Roth IRA up to the contribution limit of that tax bracket.
To make sure you're making the right decision, it's always best to research Gold IRA Review Sites for more information. Transferring distributions from a retirement plan to an IRA or an IRA to another custodian is a mostly simple process. Traditional IRAs require you to pay taxes when you withdraw funds, while Roth IRAs don't make tax withdrawals, as long as you follow the rules. The IRS exceptions are a little different for IRAs and 401 (k) plans; they even vary slightly for different types of IRAs. Possibilities include converting traditional IRAs into Roth IRAs, having several IRAs, donating IRA values to a charity, or creating a QLAC.
There are some exceptions due to financial hardship to the penalties for withdrawing money from a traditional IRA or from the investment earnings portion of a Roth IRA before turning 59 and a half years old. There are several IRA options and many places to open these accounts, but the Roth IRA and the traditional IRA are by far the most popular types. Every traditional IRA that you convert to a Roth IRA has its own five-year retention period to avoid an early withdrawal penalty. While the withdrawal rules of a traditional IRA allow you to delay the first required minimum distribution of your IRA until April 1 of the following year, you may want to make your first distribution the first year you are eligible.
Another strategy is to convert part of your traditional IRA into a Roth IRA in years when you expect to be in a lower tax bracket.