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Craig Lundquist, MBA, ChFC®, CRPC®
VP of Wealth Management
651-773-2757
Kristin Becker
Senior Administrative Assistant
651-773-2821
Ideal Wealth Advisors
Located at Ideal Credit Union
8499 Tamarack Road
Woodbury, MN 55125
CRPC conferred by College for Financial Planning
July/August 2025
Make a Roth IRA Conversion
If you're nearing or in retirement and concerned about paying too much in taxes, you may want to convert a portion or all of your taxable retirement plan assets to a tax-free Roth IRA*. Here's how it works.
Overcoming Obstacles
A major concern for many people considering a Roth conversion is their tax bill. The amount you convert from a tax-deferred retirement plan, such as a 401(k) or a traditional IRA, is considered a distribution and is added to your taxable income in the year you convert. This can create a larger tax bill than expected and potentially move you into higher income tax brackets.If you're nearing retirement but still working, the extra income can also cause you to become ineligible for current contributions to an existing Roth IRA. In 2025, contribution amounts begin to be limited when modified adjusted income hits $236,000 and phase out completely at $246,000 for taxpayers who are married and filing jointly. Limits for single and head of household filers phase out between $146,000 and $165,000.** But you do have alternative ways to save if that's the case.
Little by Little
Consider converting portions of tax-deferred retirement account assets in order to meet the income qualifications and keep your Roth IRA contribution eligibility. In this way, you spread out the conversion tax bill over time. If you were still working in 2024, you can contribute up to $7,000 to an IRA. If you're at least age 50, you can add another $1,000 in catch-up contributions.Unlike traditional retirement accounts, the Roth IRA is not subject to what's known as required minimum distributions (RMDs), so, you needn't take a Roth distribution in your lifetime. Your financial professional can tell you more.
* Converting from a traditional IRA to a Roth IRA is a taxable event. A Roth IRA offers tax free withdrawals on taxed contributions. To qualify for the tax-free and penalty-free withdrawal of earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59ó or due to death, disability, or a first-time home purchase (up to a $10,000 lifetime maximum). Roth IRA distributions may be subject to state taxes.
**IRS.gov
721082
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Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Ideal Credit Union and Ideal Wealth Advisors are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using Ideal Wealth Advisors, and may also be employees of Ideal Credit Union. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of Ideal Credit Union or Ideal Wealth Advisors. Securities and insurance offered through LPL or its affiliates are:
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