Message Font: Serif | Sans-Serif
No. of Recommendations: 0
...that is the question.

I read Roy Lewis's series on the Roth IRA. Someone argued that his analysis on switching to a Roth is flawed. The decision shouldn't be based on tax savings, but maximum return. I was all set to go Roth, but now I don't have a warm fuzzy.

Scenario: I'm 31 and currently contribute to a non-deductible IRA. I have savings now and can save enough later to pay for the taxes owed from converting, without resorting to using money from the IRA to pay. BTW, I'm at 28% tax bracket. Assuming I'm going to be in the same bracket when I retire (a mighty big one at that).

Rolling over to a Roth sounds good. Here's my reasoning: The $2000/year contribution I currently make comes out of my *after tax* paycheck. Therefore, whether non-deductible or Roth, I've paid taxes on the $2000. I make too much to have a tax-deductible IRA. Since the Roth will give me tax free distributions in the future, why not go with it?

OK, someone punch holes in my analysis. Please be kind. I need to know. Am I missing something? I can't sleep at nights.

To sleep, to dream
Aye! There's the rub...

Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
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.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! 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.