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rjm111 writes:
Am I correct in concluding that my situation (as follows) would not benefit from converting my traditional IRA to a Roth?

IRA balance = $100K. After paying taxes, conversion Roth balance = $80K. Assuming my Foolish plans work out, I want to retire in 15 years at age 55. I am going to assume a 15% percent annual return (I know this is higher than average, but I belive it is most probable given the quality of my port). In 15 years w/o conversion my traditional IRA would be $813,706 and my Roth would be $650,965. Even if I assume that I will be paying 20% cap gains on my traditional IRA in 15 years, the value of these ports would be equal after taxes. The more likely situation is that I will be at 15% tax rate or lower, therefore my traditional IRA would be worth at least $691,000 after tax vs. the tax free $650,695 value of the Roth.

1) As other posters have mentioned, you don't want to convert unless you can pay taxes from non-IRA funds.
2) You won't pay 20% cap gains tax later, because IRA distributions are income, not cap gains.
3) Your tax on the conversion is probably also mis-stated ($20,000) -- my guess is that you applied the 20% cap gains tax to that.
4) If your IRA is your only significant source of income in retirement, remember that you shouldn't look at the marginal rate to determine the tax treatment of your traditional IRA. For example, if your IRA is your only source of income, you won't pay a total of 28% until your withdrawls reach roughly $180,000 (single, standard deduction, today's brackets/rates).

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