Date of Original Version

12-3-2009

Type

Working Paper

Rights Management

All Rights Reserved

Abstract or Description

Beginning in 2010, all individuals, regardless of income level, will have the opportunity to convert their traditional IRAs into a Roth IRA by paying the ordinary income tax on the market value (at the time of conversion) of the assets being converted. Many individuals are contemplating whether a Roth conversion is in their best interest and need guidance in making this important decision. This paper discusses the costs and benefits of converting to a Roth IRA, derives the conditions under which a Roth conversion is beneficial for an individual, and provides some numerical examples.

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