should I convert to an Roth IRA ?
Hi , I am almost 75 years old and have an IRA with $ 68.000 and an IRA Rollover account with $ 97.000, does it make any sense to convert to an Roth IRA, my wife is 72 years old and also has an IRA and an IRA Rollover, we live on Social Security and from Stock and Bonds Dividents
thank you
Permalink Submitted by mk foss on Wed, 2010-02-03 19:16
If you don’t need to live on RMDs from the IRAs, it could be a good idea to convert to a Roth. I wouldn’t recommend that you convert all of your IRA balances but you might want to convert enough to stay within your current tax bracket.
Some of the negatives for seniors doing a conversion are that you may be paying tax on a higher percentage of your social security in the year the conversion income is reported and a large increase in AGI could effect your Medicare premiums for one year.
Some positives are that you don’t have to worry about the 50% penalty for failure to take an RMD on the converted funds. You also have a source of tax-free income if needed for the lives of you and your spouse and anything that remains can be left to your heirs without an income tax burden attached.