The idea of converting a traditional IRA to a Roth (atax-free IRA) is to gain two advantages: Allow the IRA funds to continue to grow taxfree. Pay the income tax due now on the current balance, rather than pay tax on your hopefully bigger balance in the future. This conversion is only beneficial if you [...]

Let’s take this hypothetical example. You worked for a company for 25 years, built up your 401(k) account and upon retirement, rolled it to a traditional IRA (in fact, you cannot roll money from a qualified plan directly to a Roth IRA). Now, you want to move $300,000 from your traditional IRA to a Roth. [...]

I’ve always been surprised that these two issues arise when discussing a Roth IRA conversion: the conversion only makes sense when the tax is paid with funds outside the IRA the reason many people don’t convert is because of the current pain of paying the conversion tax One would think that these two points would [...]