SHOULD YOU CONSIDER CONVERTING YOUR TRADITIONAL IRA TO A ROTH IRA?
Starting in 2010, most taxpayers are eligible to convert their IRA to a Roth IRA. This is a complicated decision and we recommend you consult with a pro. A "yes" answer to the factors below generally are favorable to a Roth conversion. A "no" response indicates a potential problem with a conversion.
1. Will your income/estate planning benefit from not having required minimum distributions at age 70 1/2?
2. Do you want to maximize the funds passed on to your heirs?
3. Do you have non-IRA funds available to pay the income tax on the Roth IRA conversion?
4. Will converting your IRA have minimal or little negative impact on your ability to claim Adjusted Gross Income (AGI) sensitive deductions, credits or exclusions?
5. Do you anticipate leaving the funds in the Roth IRA for an extended period (probably at least 15 years)?
6. When you or your beneficiaries take distributions from the Roth IRA, is it likely you will be in at least as high a tax bracket as at the time of conversion?
7. Is it likely you would not pay tax on Social Security benefits if it weren't for the required minimum distributions from a traditional IRA?
8. Is it likely a conversion will be taxed at low rates due to net operating loss carryovers, higher than normal deductions, or low cyclical income?
9. Have you confirmed with your attorney that your state provides the same asset protection for a Roth that is provided by a traditional IRA?
10. Do you have a relatively high basis in existing IRA's due to nondeductible contributions?
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2009