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Level 1

Roth IRA conversion

All my retirement savings is in traditional 401k and Pension.  I do not currently have any Roth IRA and I am retiring at the end of this month.   Should I consider opening  a Roth IRA account, and start transferring my 401K retirement savings to help me reduce my future tax burden?

1 Reply
Employee Tax Expert

Roth IRA conversion

Since you are retiring at the end of the month, a Roth conversion will only speed up the taxes you will be owing (if any) on your retirement plan distributions.    If you convert this year, your overall income may go in to higher tax brackets, meaning you will pay more overall taxes than if you had just taken normal distributions from your traditional IRA and retirement accounts over time.


There are good reasons to convert traditional IRA money to Roth IRA's - including avoiding the required minimum distributions and having a "better" inheritance.   Those questions are best answered with your financial adviser, who can see your entire portfolio and strategize with you about whether it is advisable to convert your retirement funds to a Roth account.

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