Conversion of IRA's to Roth

debrOctober 25, 2006

I'm age 55 and plan to retire at age 62 or sooner. Would it make sense for me at this point in my life to start changing my traditional IRA's to Roth IRA's? Looking for pro's and con's of each. Thanks, everyone

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chelone

You will have to pay taxes on whatever amount you convert to the ROTH. The traditional IRA's permit a tax deduction for the amount contributed in a year, with a ROTH the contribution is after tax money.

I guess how much you opt to convert would depend on your tax bracket and your ability to pay the taxes on it and how soon after your retirement you plan to begin withdrawing the funds. .

I converted the entirety of my IRA money back when you were first permitted to do so. If I remember correctly, I had between 3 and 4 years to pay the taxes on it. I'm glad I did it then. Now the money grows TAX FREE and there is no minimum age at which I must begin withdrawing the money.

    Bookmark   October 26, 2006 at 7:59AM
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quiltglo

There were also income limits when converting. I remember that we had to be less than $100,000 to spread the taxes out.

debr, I'm sure the regs are out there. This might be one of those things you'd want some professional help with. There are advantages to both types of IRAs depending upon your retirement plans. We have both.

Gloria

    Bookmark   October 29, 2006 at 12:39AM
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sharlee

Yes, I am glad I did convert as the tax-free money is such an advantage. At 65 I still add to it from a part-time job. It's worth paying the taxes up front over the, I believe, four year period.

I have also taken a withdrawal when needed...it's there for that reason at this age. Wish I had done that at 55yrs, but still is a good deal. Hope you consider it.

Sharlee

    Bookmark   October 31, 2006 at 7:33PM
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