Things You Will Needpen and paper
Step 1Calculate your Roth IRA potential. It's important to know this information, because it will let you know how wise it is to convert early. You can go to any IRA custodian and they will help you calculate your Roth IRA, this will help you decide whether it's worth it to go ahead and convert the IRA.
Step 2Consider converting into multiple roths or a single roth. The benefits of converting into a single roth are obvious, you get tax benefits because a single roth is only considered one box. Which means, you don't have to pay as much in taxes.
Step 3Decide to retain the equity Roth IRA. Deciding to convert or retain the equity in a Roth IRA depends on many factors. Additional tax penalties are required if you convert early. For this reason, you should consider whether or not your stock portfolio rose or fell. If it fell, it is better to wait for it to develop. If you are desperate for the money, wait 30 days after the new year to convert, this will save you a significant percentage on taxes.
Step 4Consider when to convert an IRA into multiple roths. You can convert existing IRA's into multiple roths within 30 days without having to pay additional tax penalties, as long as it's not within the same calendar year. You have to pay hefty tax penalties of 30% or more if you convert your IRA early.
Step 5Work with an IRA custodian. IRA custodians will help you open up multiple IRAs. The custodian will charge a certain amount in exchange for help with the conversion. You may not think the additional fees are worth it, but if you are new to IRA converting, you may need the extra help.