The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: TMF Roth article misleading||Date: 9/2/2000 12:18 PM|
|Author: josuna||Number: 39458 of 121219|
I just finished reading
Like so many Roth articles, it seems to give a misleading assessment of the benefits of Roth conversion.
It completely ignores the lost opportunity of investing money you have to use to pay taxes on the conversion.
The article compares paying $1,120 on a $4,000 conversion versus paying $8,400 in taxes if you don't convert and the $4,000 investment grows to $30,000.
Yeah, but what if you were to invest the $1,120 in widgets.com and assume the same growth rate, then the $1,120 would become $8,400, which would be enough to pay the taxes. Of course, you have to pay capital gains on $8,400 - $1,120. So, may Roth is better, but no where near as better as the article makes it seem.
Plus, there's other factors like tax bracket at retirement, etc.
I wish TMF would write a more in-depth article that gives a more realistic assessment of Roth conversion.
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