The Benefits and Drawbacks of a Roth IRA Conversion
A Roth IRA conversion option offers investors the opportunity to potentially benefit from re-designating the status of a retirement account from pre-tax to post-tax. Since investors are required to pay income taxes on the amount converted from a Traditional IRA to a Roth IRA, lower equity prices can provide the ability to initiate a conversion with a relatively lower income tax burden.
The suitability of a Roth conversion for a specific individual or couple depends on relative income level and marginal tax bracket, eligible deductions, other taxable losses that can be used to offset tax burden, cash available to pay the conversion taxes, and other considerations that may impact tax status and retirement time horizon.
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-Anthony Winkels is Managing Partner and a Wealth Advisor at Fortis Wealth Management
