Should I Convert my IRA to a Roth IRA?

 
 

 

Should I Convert my IRA to a Roth IRA?

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You may consider converting some or all of your IRA if you have more than ½ of your retirement accounts in your IRA and can/want to pay the taxes on the amount you convert.  Remember that Roth accounts are better if your tax brackets is higher later, and Traditional IRA balances are better if your tax brackets are lower later. Also, you are required to take money out of Traditional IRAs and pay the income tax on those distributions after you turn 70, but Roth IRAs do not have any forced distributions (called Required Minimum Distributions). Keep in mind that you could push yourself into a higher tax bracket and it is best to consult with your tax advisor prior to converting.  The conversion is not subject to the 10% penalty (if you are under 59 ½). However, if you have taxes withheld from the conversion, you will be subject to the 10% penalty on the amount you have withheld for the taxes.


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