No brainer? Conversion to Roth IRA

I'm single, 32 years old, no dependents. I have $6,000 in a standard IRA.

Income this year (including dividends from mutual funds and interest) will be $25,000. Next year, my income will be $200,000 (and will remain this way for the forseeable future).

Is it pretty much a no brainer to convert the entire IRA to a Roth? I do have the cash on hand to pay the taxes on the conversion.

Reply to
martin lynch
Loading thread data ...

tina32 had written this in response to

formatting link
: martin,

nice income jump..

Converting to Roth is not aways a no brainier; it also depends on what your financial situation will be at the retirement time.

Here are couple of websites that detail basic do's and d> I'm single, 32 years old, no dependents. I have $6,000 in a standard > IRA.

##-----------------------------------------------## Newsgroup Access Courtesy

formatting link
Tax and Accounting Software ForumsWeb and RSS access to your favorite newsgroup - misc.taxes.moderated - 24378 messages and counting!##-----------------------------------------------##.

Reply to
tina32

You look like a good candidate to me. Even in a high income tax state you'd be looking at only a $1,500 tax bill.

More important is going forward. Starting next year you can convert from traditional to Roth at any income level. So you could make a $5,000 nondeductible (I assume) traditional IRA contribution and immediately convert to Roth with zero effect on your taxes.

Phil Marti Clarksburg, MD

Reply to
Phil Marti

Don't bother. You won't be able to contribute to the Roth in the near future, so you would be left with a small Roth account.

-- Ron

Reply to
Ron Peterson

However starting in January, you will be able to make a nondeductible contribution to a traditional IRA and 30 milliseconds later convert it to a Roth.

Reply to
Arthur Kamlet

In your case yes.

If you leave the $6000 in the IRA, you have to pay taxes on all withdrawals starting in about 38 years.

If you convert to a Roth now, you will only pay taxes on the $6000, not on future earnings once moved into a Roth.

Reply to
Howard Kaikow

Congratulations on completing your medical residency !

Doug

Reply to
Doug

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.