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I just finished reading

Like so many Roth articles, it seems to give a misleading assessment of the benefits of Roth conversion.

It completely ignores the lost opportunity of investing money you have to use to pay taxes on the conversion.

The article compares paying $1,120 on a $4,000 conversion versus paying $8,400 in taxes if you don't convert and the $4,000 investment grows to $30,000.

Yeah, but what if you were to invest the $1,120 in and assume the same growth rate, then the $1,120 would become $8,400, which would be enough to pay the taxes. Of course, you have to pay capital gains on $8,400 - $1,120. So, may Roth is better, but no where near as better as the article makes it seem.

Plus, there's other factors like tax bracket at retirement, etc.

I wish TMF would write a more in-depth article that gives a more realistic assessment of Roth conversion.

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There's no perfect way to decide whether to convert to a Roth. To call Roy's article "misleading" is going way overboard. He had a few pages to cover the basics and he did a good job. A full analysis is incredibly complex because of all the variables and speculation involved. If you want to attempt it yourself, there are some software programs on the market. Brentmark puts out a good one for professionals, the Roth IRA Conversion Analyzer for $249, and they also have a consumer-oriented analzer for $49. They're at They also have a LOAD of information there on Roth IRA planning.

Even if you use something like Brentmark's analyzer, there's still a great deal of uncertainty because you HAVE to make assumptions about things you don't know about. Even if you make an assumption that the market will perform as it has historically, that still doesn't account for ups and downs that can significantly affect you in between. If an analyzer also had Monte Carlo simulation capability (to estimate the chances that certain assumptions will produce a certain result) that would be great.
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In addition to heeding Chris Riser's comments, you might want to take a look at some of the threads on the Retirement Investing board, where the pros and cons of Roths are discussed frequently. As Chris suggests, in the end you're going to have to make a decision that may or may not turn out to have been right. There's no magic answer available.

Phil Marti
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