Corning Incorporated (GLW), Honeywell International Inc. (HON), Wells Fargo & Co (WFC): The Perfectly Legal Way to Pay Zero Tax for Generations

What about income limits?
Some workers aren’t allowed to contribute directly to an IRA because their income is above the appropriate Roth IRA income limits. For single filers earning more than $127,000 and joint filers above $188,000, Roth IRA contributions are completely disallowed.

But there’s a back-door way into a Roth IRA. If you have a traditional IRA, you can convert all or part of that account to a Roth IRA without worrying about any income limits at all. The catch is that you have to include the amount you convert as taxable income on your current-year tax return, but again, that tax bill is the last one you’ll ever have to pay on that money and the income and capital gains it generates over the rest of your life and beyond.

A truly long-term investment
If you’ve ever thought about leaving a legacy for your children or grandchildren, think carefully about opening a Roth IRA. With decades of potential tax savings ahead, your loved ones will thank you.

The article The Perfectly Legal Way to Pay Zero Tax for Generations originally appeared on Fool.com is written by Dan Caplinger.

Fool contributor Dan Caplinger owns warrants on Wells Fargo. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Corning and Wells Fargo. The Motley Fool owns shares of Corning and Wells Fargo.

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