Most of the time, high income individuals are not allowed to convert a traditional IRA to a Roth IRA, but an exception applies to most everyone in 2010. Roth IRAs grow tax free and withdrawals are tax free when taken under the rules. You don't get a deduction when you put money in a Roth IRA like you do with a traditional one, but you pay that tax later with a traditional IRA. Another added twist is that the tax you would pay on conversion from traditional to Roth can now be spread out over the next two tax years (2011 and 2012). You will have to pay the tax on conversion (now or over the next two years), so you have to figure out whether it is right for you. Many banks and funds will be touting conversion as they will get new customers, new investments and new fees for those services. Financial articles on the pros and cons of Roth IRA conversions are all over the place. The best advice is to think carefully, review all the consequences and only convert if it is right for you
This blog is written by Elder Law Attorney, Edward H. Adamsky. You will find articles about Elder Law, Estate Planning, Special Needs, Disability, Alzheimer's Disease, Powers of Attorney, Health Care Directives, and other issues of important to families and elders.