Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19257  
Subject: Re: Existing IRA to Roth? Date: 6/16/2000 4:07 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Sbarone writes:

<<I have been building IRA's for nearly 30 years. A financial advisor recommended that I convert my existing IRAs to ROTH IRAs, so that I could avoid any future penalties. However, I would have to take the 28% penalty to do so now.

This didn't sound like a good idea to me, but I haven't been able to find anyone who knows about this possibility.>>


There is no penalty for converting a traditional IRA to a Roth IRA, only regular income taxes. And even if a penalty applied, it would be 10% and not 28%. Thus, I think the penalty of which you speak is the payment of income taxes that would be due, and those will eventually be paid regardless of whether you convert or not.

You should examine this issue closely because the success of a conversion is largely contingent on your tax rate today versus that of tomorrow, how you will pay the taxes due on the conversion, how long your money may stay in the Roth, and the size of coupled with your desires for your estate. Every case is different, and you must run an analysis of your specific set of circumstances to see if a conversion is best for you. You should read my discussion of this issue in post number 1567 on the Retirement Investing board at http://boards.fool.com/Message.asp?id=1040013000441002&sort=postdate. Than will give you an approach you can take to run some numbers for yourself.

Regards..Pixy
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

Post of the Day:
Berkshire Hathaway

Burger King's Play Not For Taxes?
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.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! 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.
Advertisement