Show all

Should I convert my regular IRA to a Roth IRA?

convert ira

convert ira

New York - You should consider converting your existing regular IRA account to a Roth IRA if you expect that you will be in a higher tax-bracket in retirement. Most individuals will actually be in a lower tax bracket; hence, switching to a Roth IRA does not make sense.

If your income is less than $100,000 you can convert your regular IRA to a Roth IRA beginning in January 1998. One of the major advantages of converting to a Roth IRA is that all you future distributions will be tax-free (provided you are over 59 1/2 when you withdraw your investments).

The biggest disadvantage is that you become immediately liable for the tax due on the existing IRA upon conversion. In other words, if you have $100,000 in your account, you may wind up with an immediate tax bill of $28,000, if you are in the 28% tax bracket . If you are in the 33% tax bracket, you would owe $33,000.

If you convert and owe taxes, you may want to pay the tax with money from other accounts. this allows you to keep the full account in a tax-free Roth IRA.

An independent Fee-Only financial adviser can help you determine the most appropriate IRA strategy. 


About Us

Founded in 1998, The Independent Adviser Corporation has assisted thousands of individuals, families, and businesses. We are 100% independent and objective and offer free private consultations to our clients. Our company publishes free investment research and educational materials, and when specific financial or legal advice is needed, we connect clients with a network of FEE-ONLY professionals. For more information, become a member or to schedule a free consultation, please visit our website at or 1800ADVISER.COM