Converting to a Roth IRA

Many people who have traditional IRAs may, at some point, wish to make the switch to a Roth IRA. If you’re considering this decision, rest assured that making the switch really isn’t all that difficult and can sometimes be beneficial depending on your financial situation.  

Why Make the Switch?

First of all, you should know that traditional IRAs work great for many people. However, there are some instances in which you may wish to switch to a Roth IRA.   

Basically, if you are hoping to make more post-tax money, a Roth IRA is a solid choice. The reason for this is because when you switch, you lose the tax deferral that you get with a traditional IRA. While this situation is not ideal for all taxpayers, it can work in your favor, so check with your financial adviser to determine if this is a smart move for you.

Converting Funds

If you do ultimately decide that a Roth IRA is a better choice for you, let your bank know that you wish to make the switch. You don’t even have to change banks or change up your investments. You can simply designate that they go into a different type of account.

Actual conversion of the funds can be a bit trickier, but with the help of your bank and your financial advisor, you can make the switch work in your favor. If, for some reason, you can’t get the tax conversion to benefit you and it’s going to cost more than benefit you, then you may wish to rethink your decision, at least for the time being.

Converting your IRA is a bit complex, but, with good help, you can make the right decisions for you, your accounts, your financial state, and your future.