Converting to a Roth IRA. We will look at:
- the factors in your decision,
- what it might cost, and
- provide some general guidelines to help you determine if converting to a Roth IRA is a good idea.
The Roth IRA is one of the greatest retirement savings programs ever created. You make after-tax contributions. Your money compounds tax free for your retirement. Contrast this to the old way of doing things. You get a tax deduction for your contributions. Your money grows tax deferred. When you retire and use it for income, 100% of those distributions are taxed.
You can convert your existing IRA to a Roth IRA. This means you pay the taxes today, and the money then grows tax free over time. But should you?