If you’re still not sure if the Roth IRA conversion is right for you, here is a list of conversion calculators that can help with our decision. Disclaimer: all calculators are created different, so it’s still important to meet with a professional to see if the Roth IRA conversion is right for you.
Is the Roth IRA Conversion Right For You?
If you have a traditional IRA and are considering converting to a Roth IRA, here are a few factors to consider:
- A conversion may be more attractive the further you are from retirement. The longer your earnings can grow, the more time you have to compensate for the associated tax bill.
- Your current and future tax brackets will affect which IRA is best for you. If you expect to be in a lower tax bracket during retirement, sticking with a traditional IRA could be the best option because your RMDs during retirement will be taxed at a correspondingly lower rate than amounts converted today. On the other hand, if you anticipate being in a higher tax bracket, the ability to take tax-free distributions from a Roth IRA could be an attractive benefit.
There is no easy answer to the question: “Should I convert my traditional IRA to a Roth IRA?” As with any major financial consideration, careful consultation with a professional is a good idea before you make your choice.