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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 19378  
Subject: Re: info on article by tmf pixie Date: 11/16/2001 9:40 AM
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Greetings, Desanti, and welcome. You wrote:

i am retired and 70.3years old.i have a 401k of 340,000 dollars and i have ira(s) of about 85,000 dollars.i live on my pension and social security and have no need for a distribution in the future(if all remains the same).i have no deductions to speak of(property tax,contributions,health etc.).i could pay the taxes due on the 401 and the ira's.should i convert to roth?? thanks.p.s. my tax bracket is about
22 per cent of adjusted income.state and federal.thanks again.


As Peppermintpatty pointed out, there is no pat answer anyone can provide without knowing your goals. Even then, you would have to run some numbers based on your personal information to see what may be best from you.

One approach seeing as you don't seem to require the money to live on is to see what paying the taxes today (or even over the next few years) does to the tax family as a whole. That means to you while living and to your heirs after you're gone. You'll have to look at your tax bracket as well as theirs. It makes no difference who ends up with the 401k/IRA proceeds, you or them. Either of you must pay ordinary income taxes on any money not taxed before whenever that money comes out of the 401k/IRA.

That being the case, and especially when you yourself don't need the money to live on, could make it a smart move to do the conversion now so you your heirs can get it tax-free later after it has grown through the years. The only way to see if that might be true in your case is to run some numbers over several different alternatives on how you might make the conversion(s), how long you will live, and your/their marginal income tax rates now and when you die. Don't forget that you must declare the income in the year a conversion takes place, so that could very well push you into a higher marginal federal and state income tax bracket, so account for that in your calculations as well.

Bottom line: You gotta run the numbers based on your goals and your specific situation. We can't give you a better answer than that on these boards.

Regards..Pixy
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