I may do this....thanks for the reminder.
Roth bump
A lot can change between now and retirement (depending on your age), and I have no faith that Congress will keep the full tax exemption for withdrawals from Roth IRAs in place. Why convert now -- and pay income tax on the conversion -- and run the risk of getting it taxed again?
You plan just in case but I disagree with the premise! With conservatives in charge government revenue can increase by growing the economy just as has been don countless times. We need to reduce taxes and shrink the size of government!
Plus the Roth lets you withdraw your principal tax-free and penalty-free whenever you want (once you have had the account for five years). And there are no mandatory distributions when you retire. And there are favorable inheritance provisions.
Also, converting this year allows you to spread the tax hit over 2011-2013 instead of having to take the whole hit in April 2011.
Financial decision-making is the one area of life where I would love to turn it all over to some fantasy expert, one who knew all, could be trusted to the Nth, etc.
I have no feel for it, and studying it leads to a house of mirrors where nothing seems real and conclusive.
I can't control what they do to me in the future, but I can do what I can within the law to provide for myself as well as I can. For now, for me, investing retirement money in a Roth is the wisest decision. I can't go around refusing to do what is wise in the current environment because of what someone **MAY** do in the future.
IIRC, people above the income cap for a Roth are allowed to convert existing accounts, but NOT to contribute new funds after that.
I’m in the “yeah, right, you won’t decide to tax/take it later” camp myself anyway (after tell anyone who saved for retirement that they will receive no SS, since we don’t “need” it).
I can’t invest worrying about what the rules “might be” down
the road. I prefer to deal with the game as it’s being played
at present. If the rules change, so does my strategy.
No one should be without a Roth IRA gaining themselves at least 8% (mine’s up 57%) tax free right now. It’s a no brainer.