Traditional IRA’s vs. Roth IRA’s

Hi Terry,

I have traditional and Roth IRA’s, and a few years away from retirement. Should I convert the traditional to Roth and pay the taxes now, or should I wait until they come due and pay the taxes at that time, when I’m retired and hopefully in a lower tax bracket. If I wait, I wouldn’t have to pay the lump sum in taxes at one time and only cash each of them in when needed.

Thank you.

Terry Says:  Well, you will have required minimum distributions from your traditional IRAs, and if you only take that amount it will spread out the income tax payments.  As you noted, you are likely to be in a lower bracket then–and so that will spread out the pain. Then if you don’t need to withdraw from the Roth IRAs, you can keep that money growing tax-free –and even pass it on to your beneficiaries if you don’t use it in your lifetime.  It’s important to have a nice balance, and I typically don’t want to pay the taxes any sooner than necessary.