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Author: yobria Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: Re: Conversion: Trad to Roth Date: 2/17/2004 10:06 PM
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If you are in the thirty to forty year old class, I think it is a no brainer. A traditional IRA is 100% taxable ordinary income when you take it out. Yes, you got a Federal Income Tax itemizable deduction when you contributed, but contributions are a small part of the total you hope to withdraw.

Unfortunately the Roth is no more generous than the Traditional IRA financially. While the taxes paid on the initial contributions may seem like a small part of the total, that small part compounds over time.

If your tax rates are the same, you'll wind up with the same amount of after tax money whether you choose a Roth or a TIRA, all else equal.

There is an interesting exception where the Roth works out better if you're able to max out all available retirement plans, but for most people with a retirement plan at work it's a wash.

Nick
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