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I'm strongly considering converting my wife's $39,000 IRA to a Roth this year. She is a homemaker with 0$ income (only 38 years old). I will make about $105,000 this year. Our only deductions would be std plus $16,500 401(k). This will drive much of the conversion into the %25 bracket. We can cover the taxes with money from our regular savings without taking too much out of our emergency fund. I also understand that we have until late 2011 to decide if I wish to reverse this conversion without fees, & that we can defer the taxes until 2011/2012 (%50 each year), although tax rates may revert to higher amounts by then.

It seems to me that in the long run, paying $9,000 (ish) in 2010 will yield (tax) savings much greater than we would earn by investing this money LT in stocks in a regular brokerage account. The other factor here is that we have about $230,000 in taxable tax-defered savings including this account, so we would be moving a significant percentage to tax-free, tax-defered savings, which will help with taxes when we retire.

Any advice?

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