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Hi
It occured to me recently that one could contribute to a traditional IRA in a high income year to take advantage of the tax deduction in a high tax rate year, and then convert it to a Roth IRA in a year when ones tax rate is lower, thereby paying a lower tax on the amount and getting the advantage of no tax when it's time to distribute.

Is this a sound idea or can anyone punch holes in it?

I'm thinking of recharacterizing my Roth IRA contributions for 2005 to a Traditional IRA to get the tax deduction for 2005, a high income year, and then I can roll it over to a Roth in a low income year.

I'm also thinking of rolling over my SEP IRA to a Roth in 2006, a low income year for me.

Comments?
Thanks,
RB
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No. of Recommendations: 1
Hi RB,

This board ("Retirement") does not have many members. I suggest you come on over to the other board ("Retirement Investing") which has a lot of members.

http://boards.fool.com/Messages.asp?bid=100154

I think your idea is sound. Just remember that what you convert gets added to your income, so make sure your conversion doesn't put you in a higher tax bracket.
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jrr7,
Thanks, I'll check out that other board...
RB
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