Should you convert to a Roth IRA now? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Should you convert to a Roth IRA now?

by on
in Small Business Tax

Is converting a traditional IRA to a Roth this year a good idea? It de­­pends on the situation.

Strategy: Weigh the pros and cons. Although taxpayers no longer can benefit from a special tax break for conversions in 2010, converting to a Roth still might be a smart tax move. Of course, the conversion is subject to current income tax.  

The conversion technique often makes sense for high-income tax­payers who expect to be in the same or a higher tax bracket in retirement.

Here’s the whole story: The main advantage that Roth IRAs have over traditional IRAs is that qualified distributions from a Roth in existence at least five years are completely exempt from tax. This includes distributions made after reaching age 59½, on account of death or disability or to pay first-time homebuyer expenses (up to a lifetime limit of $10,000). In contrast, distributions from a traditional IRA are taxable at ordinary income rates.

Also, you do...(register to read more)

To read the rest of this article you must first register with your email address.

Email Address:

Related Articles...

    No matches

Leave a Comment