Converting to a Roth IRA? Answer These 3 Questions First
Ask yourself when you'll need the money, what your future tax bracket may be, and where you'll find the money to pay the taxes due upon conversion.
Retirement expert and author Ed Slott says that investors need to answer three important questions before converting from a traditional IRA to a Roth IRA. In a recent interview with Morningstar director of personal finance Christine Benz, Slott shared those questions, explained the importance of recharacterization, and revealed some common IRA conversion pitfalls.
Christine Benz: There are a lot of moving parts with IRA conversions. Deciding whether to take those traditional IRA assets that an investor has been building up and pay tax on them, and then convert them to Roth to enjoy the tax-free withdrawals in retirement can be a complicated decision. Where should investors go for advice? Should they seek out a tax advisor?