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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 76418  
Subject: Re: Conversion to Roth IRA? Date: 2/28/1999 2:06 PM
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Greetings, Jtpowell, and welcome. You asked:

<<In 1998 I rolled a 401(k)into a mutual fund as a traditional IRA. I do not, nor plan to, contribute funds to this acct., as I have a new 401(k)/profit-sharing plan with my current employer. My plan is to just let this small amount of money ($1,400.00) grow until retirement. My question is this: Should I turn this into a Roth and take the tax hit on it now so that I can withdraw it tax-free at retirement? It seems that it would be the wat to go, but any advise would be greatly appreciated.>>

Normally, I'd say that the decision to convert to a Roth depends on a number of factors such as your tax rate today versus that of tomorrow, how you will pay the income taxes due on the conversion, how long the money can stay in the Roth, the size of your potential estate, etc. In this case the amount is relatively minor. Therefore, assuming you have ten or so years until retirement and that you will pay the taxes due from money outside the IRA, then IMHO conversion to a Roth will probably provide you more benefits than leaving the money in a traditional IRA or transferring it to your new employer's 401k plan (assuming the plan accepts rollovers of old 401k plan money).

Regards....Pixy
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