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Subject:  Trad ira vs roth ira Date:  4/1/2006  9:59 AM
Author:  RBMunkin Number:  184 of 315

It occured to me recently that one could contribute to a traditional IRA in a high income year to take advantage of the tax deduction in a high tax rate year, and then convert it to a Roth IRA in a year when ones tax rate is lower, thereby paying a lower tax on the amount and getting the advantage of no tax when it's time to distribute.

Is this a sound idea or can anyone punch holes in it?

I'm thinking of recharacterizing my Roth IRA contributions for 2005 to a Traditional IRA to get the tax deduction for 2005, a high income year, and then I can roll it over to a Roth in a low income year.

I'm also thinking of rolling over my SEP IRA to a Roth in 2006, a low income year for me.


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