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URL:  http://boards.fool.com/sbarone-writes-ltlti-have-been-building-iras-12749305.aspx

Subject:  Re: Existing IRA to Roth? Date:  6/16/2000  4:07 PM
Author:  TMFPixy Number:  4212 of 19483

Sbarone writes:

<<I have been building IRA's for nearly 30 years. A financial advisor recommended that I convert my existing IRAs to ROTH IRAs, so that I could avoid any future penalties. However, I would have to take the 28% penalty to do so now.

This didn't sound like a good idea to me, but I haven't been able to find anyone who knows about this possibility.>>


There is no penalty for converting a traditional IRA to a Roth IRA, only regular income taxes. And even if a penalty applied, it would be 10% and not 28%. Thus, I think the penalty of which you speak is the payment of income taxes that would be due, and those will eventually be paid regardless of whether you convert or not.

You should examine this issue closely because the success of a conversion is largely contingent on your tax rate today versus that of tomorrow, how you will pay the taxes due on the conversion, how long your money may stay in the Roth, and the size of coupled with your desires for your estate. Every case is different, and you must run an analysis of your specific set of circumstances to see if a conversion is best for you. You should read my discussion of this issue in post number 1567 on the Retirement Investing board at http://boards.fool.com/Message.asp?id=1040013000441002&sort=postdate. Than will give you an approach you can take to run some numbers for yourself.

Regards..Pixy
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