Please note the information below is intended to provide generalized information that is appropriate in certain situations. It is not intended or written to be used, and it cannot be used by the receipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer. The contents of the information provided below should not be acted upon without specific professional guidance. Please call us if you have any questions. 

Do you wonder if a Roth IRA is right for you? Taxpayers may convert a traditional individual retirement account (IRA) into a Roth IRA, even if they were previously told that their income is too high. And, any taxpayer—including the previously excluded married-filing-separately taxpayer—may convert a traditional IRA to a Roth IRA, regardless of filing status.

You made the decision and the investment once already. Why change to a Roth IRA now?

Both traditional and Roth IRAs share a number of characteristics. Both IRAs limit the amount you can contribute to the lesser of your compensation or $5,000, as adjusted for inflation. Both IRAs allow you to make additional catch-up contributions if you're 50 years or older. And, both IRAs increase the maximum contribution limit by $1,000 for anyone over 50. However, Roth IRAs offer certain advantages traditional IRAs just can't touch:

Better timing

Qualified contributions to traditional IRAs are fully or partially deductible, but the contributions and earnings aren't taxed until distributed. Roth IRAs, on the other hand, are funded with after-tax money, but they grow tax free and generally are not taxed when distributed, potentially resulting in lower taxes paid.

More flexibility

With a traditional IRA, you can neither set up nor make contributions to your IRA in the year you turn 70 1 2 years old or later. With a Roth IRA, you can create or contribute to an IRA for the rest of your life.

Fewer restrictions

Additional phase-out rules that apply to holders of traditional IRAs do not apply to holders of Roth IRAs. As a result, Roth IRA contributors who actively participate in their employer's retirement plan are not subject to additional contribution and deduction limits.

Longer life

While individuals contributing to a traditional IRA must begin receiving distributions by April 1 of the year following the year in which they turn 70 1 2 , individuals contributing to Roth IRAs can choose to not ever receive distributions, as long as they're alive.

Will you convert? So you know, once you convert a traditional IRA to a Roth IRA, you cannot change your mind. So, having a discussion before converting is important