Taxpayers are married. Couple's joint income is $200,000 from employment and $50,000 for real estate earnings. They are both age 58. They desire to retire in 12 years.
They own four real estate rental properties. They provide you with this invormation on the properties:
Property 1: Cost$2,000,000. Market Value $2,000,000. Adusted basis $500,000;current loan $300,000
Property 2: Cost$2,000,000. Market Value $2,000,000. Adusted basis $500,000;current loan $300,000
Property 3: Cost$5,000,000. Market Value $2,000,000. Adusted basis $1,000,000;current loan $300,000
Property 4: Cost$5,000,000. Market Value $2,000,000. Adusted basis $2,000,000;current loan $300,000
You are asked to advise taxpayers on the question:
This couples has $2,000,000 in an IRA from previous employment. They ask you if he would be better off if he transferred this money to a Roth IRA. They have heard that he can do this if he pays tax on the $2,000,000 now. Then the remainder in the Roth IRA will grow tax free and there will be no tax when he takes it out after he retires.
Assume r=5% with no annual grow rate their income is not changed in each year you must use numerical examples with your assumptions.