Estate Planning

Roth Conversions - Just Because You Can Doesn't Mean You Should

By Greg Herman-Giddens

Some financial advisors are warning against a Rush to Roth.  The key to is to approach the idea cautiously and do a comprehensive analysis.  Whether a Roth conversion makes sense is a highly individual decision, to be made in consultation with your advisors.

I did a Roth conversion the last time the IRS allowed us to pay the taxes over a couple of years, which was about 10 years ago. This time around, however, I'm not so keen on the idea.

I have not completed an analysis of my own situation at this point, but I will probably decide against a conversion of my traditional IRA, as most of the additional income would likely be taxed at combined federal and state rates of over 40%.  Even with virtually certain future income tax rate increases, I expect that my taxable income will be lower in retirement.  That's particularly true if I head to sunny Florida, where there's no state income tax!  Plus, I'm not keen on giving Uncle Sam and the NC Department of Revenue $40,000 + of my savings - I may need it down the road (or even next year, as my son heads off to college)!

Full post as published by North Carolina Estate Planning Blog on December 29, 2009 (boomark / email).