IRA converted to Roth

Dear CPA

I’ve read that now might be a good time to convert a traditional IRA into a Roth IRA.   I don’t understand why this might be a good idea?

Thanks, Alan B., Edina

Hello Alan

Yes, with your stock and/or mutual fund share values down, it might be a good idea to convert a Traditional IRA (or a portion of it ) into a Roth IRA .  Your adjusted gross income must be under $100,000 in 2009 to qualify.  You will need to pay ordinary income taxes on the converted traditional IRA, but there’s a good chance that your stock or mutual fund shares will recover in several years.  Since you would have already paid income taxes on the funds in the Roth IRA, you should be a very good position of never having to pay income taxes during retirement on the Roth IRA distributions.

Good luck!
Joe

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