Roth IRA Conversion Opportunities
ROTH IRA CONVERSIONS IN A DOWN MARKET
Is it time for a break - that is a tax break? With the stock market down 25-40% from its fall 2007 highs, it's certainly a time to consider converting your traditional IRA to a Roth IRA.
The pros of a Roth conversion. A Roth IRA gives you two huge benefits: tax-free growth and tax-free income distributions in retirement (providing you are age 59½ or older and have held your Roth IRA account for 5 or more years).4 Additionally, you can still contribute to a Roth IRA after age 70½ - and you don’t have to take mandatory withdrawals from it.5 These facts alone might motivate you, especially if you are in your thirties or forties.
A Roth IRA conversion can also be useful for older investors who don’t need their IRA assets. If you don’t think you’ll need to tap your IRA, you might consider doing a Roth conversion and leaving the Roth IRA to your heirs. Untouched, those Roth IRA assets can keep compounding tax-free across the rest of your life (and subsequently, the rest of your surviving spouse’s life). Here’s another advantage: converting that untapped traditional IRA to a Roth will lower your taxable estate.6
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