IRA?Roth?

[GUMBY GCF]

I was pondering converting some of my IRA funds over to a Roth.
I am thinking might be a good year to convert while taxes are still only High....
Anyone have any thoughts along these lines?

 

[cvm]

Keep in mind that if your adjusted gross is more than 100K you can't convert. But I think that's going away in 2010.

 

[DTWDSM]

Thoughts....talk to your CPA and/or tax person, they know your financial situation a lot more than we do.

Personally I have a Roth, I like the fact that I will not be taxed on the earnings. There are all kinds of rules when you go to transfer retirement funds and they are set up so that you may have to pay penalties and/or taxes so be careful

 

[Pat Murphey]

Thoughts....talk to your CPA and/or tax person, they know your financial situation a lot more than we do.

Personally I have a Roth, I like the fact that I will not be taxed on the earnings. There are all kinds of rules when you go to transfer retirement funds and they are set up so that you may have to pay penalties and/or taxes so be careful

I agree, but be careful about the motives of those giving advice - most of them just want your account and are not looking after your interests. Remember that your tax bracket on the conversion will be based on the combination of your income with the IRA amount - could be a pretty expensive transaction. Don't forget State taxes, if applicable.

For example, you might try a spreadsheet with growth to a retirement date and compare the tax free Roth retirement income with 28% less to start, with the retirement income from the full IRA amount taxed at 28% (or less).

Roths can be very good if you are young and in a low tax bracket when contributing. If that's the case, why not just start a Roth and leave your IRA alone? I would also not trust the folks in Washington on any tax rule way out in the future.