No. of Recommendations: 0
<<So the rules changed, but those rules were NOT applied retroactively. The changes were applied against future deposits.

Will the rules change for the Roth? IMHO, yes. The Congress giveth and the Congress taketh away. The Roth as it is now probably won't last long. But for those who use it today, the rules probably won't change for the account they establish today save the ability to make future contributions.>>

This is certainly the assumption that most people operate under. Now once in awhile, it turns out that a loophole leaves people with more tax savings than the act contemplated, and they might change the rules. Depreciation recapture comes to mind. But tax laws would lose their effectiveness at shaping social policy if people thought that Congress would rescind tax benefits granted to people who do what the Congress had intended.

A more likely scenario is the indirect repeal of the benefits of Roth conversion. For example, if the income tax is repealed before you retire, or if rates are reduced drastically, then you will lose some or all of the benefits of Roth conversion, and it will be too late to recoup the costs.

My IRA only has about $10,000 and is partly after-tax anyway==so I am willing to take the chance. But if I had a large IRA based on conversion from a 401k, I would probably hedge by only converting half the IRA to Roth. I would also dollar-cost average the portion that was in equities over a 4-6 month period to minimize the risk of converting at a market peak.

Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.