Roth Conversion
I a bear market a good time to convert IRA’s 401’s to Roth. Won’t the current low cost minimize the tax consequences due when you purchase a Rothy?
Terry Says
Yes, it is always good to convert traditional IRAs (and pay taxes) when the value of your account is low. (It might go lower!)
BUT, also two important things:
1. Have money OUTSIDE your IRA to pay the taxes. Otherwise the benefit of the conversion is impacted — less money growing tax-free in the future. Then again, don’t wipe out your entire cash cushion that you hold outside your retirement plan.
2. Check on the impact this conversion will have when added to your ordinary income for the year. Not only could it raise your tax bracket — but if you’re on Medicare it could impact the cost of Part B premiums!
Now, after all that, is it worth the conversion??
