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Subject:  Re: Roth IRA Contriubtions & Conversions Date:  3/4/1999  8:35 AM
Author:  TMFPixy Number:  8936 of 90796

Greetings, ph00lish, and welcome. You wrote:

<<Looking for answers!! I have read a lot of data but still confused as to the better road to travel. Have a 100K in a traditional IRA. I am 59 and expect to work
another 5years. Currently in 15% tax bracket and will in all likely hood remain there (unless one of you kind souls out there can endow me).Two part question, going forward should my 2k contribution be Roth or traditional and should I convert the existing IRA over to a Roth? I will need to use 15k of the IRA to make the converstion but there would not be an early withdrawal penalty. >>

If your annual contribution choice is between a nondeductible traditional IRA and a nondeductible Roth IRA, then the Roth wins hands down because of the ultimate tax-free withdrawals. OTOH, if you are choosing between a fully-deductible traditional IRA and a Roth and you are using the same investment in each, the choice depends in general on what you think will happen to income taxes. If you think you'll be in the same marginal bracket in retirement as you are in now, then the net result is essentially the same for both. If you think your tax bracket will be higher in retirement, then the Roth is better. If you think your tax bracket will be lower, then the traditional IRA wins.

As to the conversion issue, generally if you must use IRA money to pay the taxes due on that conversion, then you're better off in the traditional IRA.

Use of a Roth IRA depends on a number of circumstances. I've outlined the major ones in an analysis posted on this board that you may read at . Look it over. I think you will find it helpful.


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