Amrein Financial
Roth Conversion is not a Simple Decision
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| Roth Conversion Analysis |
Starting in 2010 the income limit restriction has been eliminated on converting qualified monies to a Roth IRA. Recently,
the media and the financial service industry have made this point popular. You need to be very careful before you
making that decision. It is not a simple decision.
The big attraction for a Roth conversion is that a Roth IRA grows tax free with certain restrictions. In addition
projected tax rates are to increase in the coming years. Some people are looking at these events and making a quick
decision. In many cases you need to do further analysis to see if this is the correct decision for your situation.
If you have college age children, a Roth conversion could impair your ability to qualify for financial aid is an issue often
not discussed.
There are many factors that need to be evaluated in this decision. Some of the additional assumptions to consider are:
Another factor in this conversion is the way to pay the tax due. An advantage to convert in 2010 offers various methods
of paying the taxes. Currently 2010 is the only year that will offer this advantage. Again this decision needs additional
analysis.
the media and the financial service industry have made this point popular. You need to be very careful before you
making that decision. It is not a simple decision.
The big attraction for a Roth conversion is that a Roth IRA grows tax free with certain restrictions. In addition
projected tax rates are to increase in the coming years. Some people are looking at these events and making a quick
decision. In many cases you need to do further analysis to see if this is the correct decision for your situation.
If you have college age children, a Roth conversion could impair your ability to qualify for financial aid is an issue often
not discussed.
There are many factors that need to be evaluated in this decision. Some of the additional assumptions to consider are:
- Sources of future income
- Projected tax rates of you and your heirs
- Projected Required Minimum Distribution
Another factor in this conversion is the way to pay the tax due. An advantage to convert in 2010 offers various methods
of paying the taxes. Currently 2010 is the only year that will offer this advantage. Again this decision needs additional
analysis.
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Tax free does not always make it better.