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Subject:  Re: Should I convert IRAs to Roth IRAs? Date:  8/19/2005  3:07 PM
Author:  pauleckler Number:  47306 of 88532

Welcome Chitown. Glad you could join us.

First, keep in mind that IRA and Roth IRA are individual accounts. Hence, you must keep yours separate from your husbands. However, in considering things like asset allocation, you can consider them collectively.

You are allowed to have as many IRA and or Roth IRA accounts as you like under the law. Administrative paperwork and maintenance fees are the reason most people try to minimize the number of accounts they maintain.

So yes, you can do a Roth conversion on an existing traditional IRA while you own another Roth account. You can even combine the two accounts into one if you like.

As to whether or not you should, yes it depends on what your tax rate is now compared to what it is likely to be in retirement. Having a low tax rate now is an excellent reason to convert now.

Tax rates are always difficult to predict in the distant future. Congress can change the law and those rates at any time. However, most of us see no reason to believe costs of government are going to go down, and income tax remains the major source of tax revenue. I would be surprised to see tax rates below 15% in retirement. And if your investments do well, careers prosper, and you have say nice pensions to retire on, tax rates of 35% or more are not uncommon.

So if you are in a low tax rate now, I would take the risk and do the Roth conversion (as long as it is not so large that it puts you into a higher tax bracket). If it is a large account, then partial conversions limited by those tax brackets over a period of years might be preferable.

Good luck.
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