Jan 18

Will it help cash flow or taxes later on? Should I convert now when value is lower? Does it matter? Taxes consequences? Limits to converting?

2 comments so far...

  • robe Said on January 18th, 2010 at 2:17 pm:

    Roth is not taxed, since taxes were paid before deposit. Choose the method that will allow you the most accumulation. If you’re young, Roth may make sense. If you’re high earning, and intending to take out income as a steady stream (pension years), you can accumulate far more in a healthy market by tax protection up front, and only paying tax on the monthly withdrawals later in life, while the balance continues to accumulte with tax protection.

  • edgetrader Said on January 18th, 2010 at 2:40 pm:

    Paulflighty, a Roth IRA gives you no deduction for
    your contributions. What you get in return for the
    loss of contribution deductions is that all of the
    earnings accumulate free of tax upon withdrawal.

    You also avoid the early withdrawal penalties on
    certain withdrawals, and you do not have to take
    minimum distributions after age 70.1/2.

    What you need to weigh is the value of a tax
    deduction for contributions to a regular IRA,
    v the growth potential of untaxed future dollars,
    which, if you handle your Roth investments well,
    can dwarf the short-term benefits derived from
    contribution deductions on a regular IRA.

    Most are of the mind that the benefits of tax-
    free growth are a greater advantage of the
    two IRS choices.


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