Eligibility Rules Open Roth Conversions to All Investors
On January 1, 2010, the income restrictions that limited the conversion of retirement assets to a Roth IRA were eliminated. Now that anyone with qualified retirement assets can convert to a Roth, is it right for you?
Who should convert?
Since everyone’s situation is unique, you should carefully weigh the advantages and disadvantages of converting to a Roth – and we’re here to help you do that. Here are a few of the important aspects we can help you consider:
- Expectation of Tax Rates – If you think you or your heirs will be in a higher tax bracket when assets are withdrawn from your IRA, it may make sense to convert to a Roth and pay the taxes now.
- Tax Diversification – By establishing both a Traditional IRA and a Roth IRA, you can balance pretax and tax-free income sources during retirement. This can help if you are on the border between two tax brackets.
- Affordability – If you can pay any tax associated with conversion with funds outside of your IRA, more of your money can now grow tax free. This can also help to restore any market losses you’ve suffered.
- Time Horizon – If you do not need IRA distributions for support during retirement, a Roth can allow funds to compound tax free during your entire lifetime for the benefit of your heirs.
If you are considering a Roth conversion and would like more information on how it can affect your specific situation:
- Call us at 800 842-2888
- Have one of our experienced consultants contact you.
- Use our Roth IRA Conversion Calculator to compare potential results of a Traditional IRA versus a Roth IRA.
The tax information in this article is not intended to be used, and cannot be used, to avoid possible tax penalties. It was written to promote the products and services the article describes. Neither TIAA-CREF nor its affiliates offer tax advice. Taxpayers should consult an independent tax advisor for advice based on their own particular circumstances.
Investing in securities involves inherent risks. Past performance is no guarantee of future results. Investment return and principal value will fluctuate, so your accumulation, when redeemed, may be worth more or less than the original cost.
TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products
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