Is a Roth IRA conversion right for you this year?
Posted on 08.01.14
If you have a traditional IRA, you might benefit from converting some or all of it to a Roth IRA. A conversion can allow you to turn tax-deferred future growth into tax-free growth. It also can provide estate planning advantages: Roth IRAs do not require you to take distributions during your life, so you can let the entire balance grow tax-free over your lifetime for the benefit of your heirs.
There is no income-based limit on who can convert to a Roth IRA. But the converted amount is taxable in the year of the conversion. Whether a conversion makes sense for you depends on factors such as:
- Your age
- Whether the conversion would push you into a higher income tax bracket or trigger the 3.8% net investment income tax
- Whether you can afford to pay the tax on the conversion
- Your tax bracket now and expected tax bracket in retirement
- Whether you will need the IRA funds in retirement
We can run the numbers and help you decide if a conversion is right for you this year. Contact us: firstname.lastname@example.org | 804.747.0000
Source: PDI Global, Image Source: Getty Images