Thank you Bill, for the useful response. As luck would have it, your scenario A applies. The whole 7k is a taxible event in this case. Apparently, the question I have to resolve with myself is: Will I be able to make more than 7000 (via growth)in this account between now and age 59.5 ? Since I am age 39, I would certainly hope the answer is Yes ! Therefore I would think that in spite of this tax, it would make sense to convert to the Roth variety IRA, paying the tax with other money as you suggest. The tax burden for this account, spread over the 4 year period you mention should be fairly painless and is mighty nice (if not surprising) of our friends in Washington.
Yes, the numbers I provided in my last note are not as great as they appear. The piece of info I omitted was the length of time I've had this account, actually I forget exactly, but probably 15 years anyway. For much of the 15 years, you had 3 choices of where to invest, 1)cd's..2)Cd's and 3) cd's !! This is why I never contributed much to it. As of Feb. 97, they opened it up to a handful of mutual funds, I chose the Putnam Investor's fund (they wave the "heavy baggage" fees/load) and this is where the majority of the 4000 gain has come from in just the last 12 months. Amazing.
I will consult with a CPA. The irony here is I'm married to one. The problem, I don't see her much during tax season. Thanx again for your help.
Regards,
Joe |
