No. of Recommendations: 1
This is false logic. Yes, you would pay more dollars in taxes by taking it out of a traditional IRA, but the amount left in your pocket will be the same assuming equal tax rates.

Consider $1000 converted. Paying 25% now will leave you with $750. Assuming it grows to 10 times it's current value in a Roth, you'll have $7,500.

Leave it in a traditional IRA and $1000 grows to $10,000. Pay 25% and you have exactly the same $7500.

Personally, I wouldn't convert.


This topic has been hashed over for going on 10 years. I can't believe that after all this time that there are so many (presumably astute) advisors who say it's a no-brainer to convert. Of course, it is a valid question for someone new to ask, but the general answer is pretty well solid.

For most people, it does not make sense to convert. As Murray said, the math comes out the same.

But.....there is no reason to pay taxes before you absolutely have to. Why would you pay taxes now in order to avoid paying the same amount of tax in the future?

Also, when you retire and no longer have W-2 income, it is very easy to shift the timing and amounts and taxability of getting your income. I've been surprised at how easy it is to stay in the 15% tax bracket even with a very comfortable income.

Not to mention the political risk, that a few decades in the future the folks in Washington will see all the money that "greedy rich" people are taking from their tax-free accounts, and decide that it just isn't fair for them to now pay income tax on it. Indeed, that's what they did with Social Security income in the '86 tax reform.
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