So when might a Roth conversion make sense?Appleby said the following are some of the cases in which Roth conversions may make sense:
- The IRA owner wants to leave a tax-free inheritance to his beneficiaries, and does not care how much it costs him to pay the taxes now, even if it would cost more if he pays the taxes instead of his beneficiaries paying the taxes.
- The results of comprehensive Roth conversion analysis shows that a Roth conversion will very likely make good tax/financial sense.
- The IRA owner is at the lower end of the tax-rate scale now, and will very likely be in a much higher tax-rate scale as his income increases including during retirement.
- The IRA owner has enough deductions and tax credits to offset the tax bill that would be due on the Roth conversion.
There is no cookie cutter solution to the question, should I c3onvert my IRA/401(k) to a Roth? Each individual has unique circumstances and should the objective advice of an independent fiduciary.
Please comment or call to discuss how this affects you and your family.