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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75340  
Subject: Re: Boiling This Down - IRA Conversion Date: 1/10/2000 2:54 PM
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Greetings, ArnoldK, and welcome. You wrote:

<<So - having read a bunch of other posts - can one of you VFPs (Very Foolish Persons) tell me if I've boiled this down correctly? I'll likely be leaving my job later this year, rolling the 401K over into a traditional IRA, and expect to have considerably lower taxable family income the following year (2001) and maybe for several years after that. If I decide to start converting the traditional IRA money to the Roth, it'd be best to do that during the next few tax year(s) when we expect to be in a lower tax bracket - si? I know this is so basic to some of you, but please humor me. I'm just getting a handle on the basics! >>

If you anticipate a lower tax rate in the next few years and if that rate will be lower than what you expect it to be in retirement, then converting your traditional IRA to a Roth while you're in that lower bracket may make perfect sense. I recommend you look at this issue carefully, though, because its success does rely on your tax rate today versus that in retirement, how you will pay the taxes due on the conversion (the rollover IRA should not be used for that purpose), and the size of coupled with your desires for your estate. It's really not a "no-brainer" decision, so you must run the numbers prior to taking that step to see if it makes sense for you to do it.

Regards..Pixy
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