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Author: MurrayS Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76392  
Subject: Re: Roth Conversion Question Date: 12/5/2009 8:39 AM
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So...my question is: given the high amount of taxable income I will be receiving upon retirement, is it a good idea to convert my tradtional IRA to a Roth IRA, and should I continue to contribute to my 401k or put the cash into the Roth IRA?

Personally, I would look at the taxes you would pay on your conversions today and what taxes you would pay on withdrawals in retirement. Using a simple online tax calculator (I like HRBlock) with your expected incomes now and then is a good start. Be careful to not simply look at the tax rates but how much more in tax you would pay for additional dollar of conversion/withdrawal you make.

Bottom line, I wouldn't pay 25% or more tax on conversions today since you'll likely be able to take money out at that tax rate or lower in retirement. If you have some extra cash, by all means, put it into a Roth on top of what you contribute to your 401k.

There was another discussion on this just a week or two ago with more details that may help you.

-murray
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