The seventh most common retirement question: Should I convert IRA assets into a Roth IRA? And if so, how much and when?…(read more)

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In recent years, many individuals have been considering converting their assets from a traditional IRA to a Roth IRA. But is this the right move for you? Before making any decisions, it is important to understand the differences between the two types of individual retirement accounts (IRAs).

A traditional IRA allows you to make pre-tax contributions, which can reduce your taxable income in the current year. When you withdraw money from a traditional IRA, you will be taxed at your ordinary income tax rate. With a Roth IRA, you make after-tax contributions, which means you will not get an immediate tax break. However, when you withdraw money from your Roth IRA, it is tax-free. This means that you will not pay any taxes on the money you withdraw.

When deciding whether or not to convert your assets from a traditional to a Roth IRA, there are a few factors to consider. First, you should determine whether or not you will benefit from the tax break you get from a traditional IRA. If you are in a higher tax bracket, then the tax break may be worth it. However, if you are in a lower tax bracket, you may not benefit as much from the tax break.

Second, you should consider how long you plan to keep the money in the account. If you plan to keep the money in the account for a long time, then the tax-free withdrawals of a Roth IRA may be more beneficial. On the other hand, if you plan to withdraw the money soon, then the tax break from a traditional IRA may be more beneficial.

Finally, you should consider the fees associated with converting your assets. There may be fees associated with converting from a traditional to a Roth IRA, so it is important to understand what these fees are before making a decision.

Overall, deciding whether or not to convert your assets from a traditional to a Roth IRA is a personal decision that should be based on your individual financial situation. It is important to consider the tax implications, the length of time you plan to keep the money in the account, and the fees associated with the conversion. With careful consideration, you can make an informed decision that is right for you.