Convert Traditional IRAs Into Roth Accounts


Article Posted on 02/18/2020


Should I consider converting my traditional IRA to a Roth?

A traditional IRA is pretax now, taxable when drawing in retirement. A Roth is the opposite using after tax dollars now, tax free when drawing in retirement. 

In the past, Roth conversions were limited to taxpayers with income(MAGI) under $100,000, but that is no longer the case. 

 The best time for a Roth conversion is when you expect to be in the same or higher tax bracket during your retirement years than your current bracket. If we knew what the tax rates would be at retirement this would simpler decision, but no crystal ball here. 

 The TCJA bill set lower rates than past, now may be the time to consider this option. The hard part of a conversion is you trigger the tax , but don't get any cash to pay the bill.  Planning is key, consult your tax advisor before making any conversions. 

 

*MAGI = modified adjusted gross income

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