No brainer? Conversion to Roth IRA

[martin lynch]

I'm single, 32 years old, no dependents. I have $6,000 in a standard
IRA.

Income this year (including dividends from mutual funds and interest)
will be $25,000.
Next year, my income will be $200,000 (and will remain this way for
the forseeable future).

Is it pretty much a no brainer to convert the entire IRA to a Roth? I
do have the cash on hand to pay the taxes on the conversion.

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[tina32]

tina32 had written this in response to
http://www.rockryno.com/taxes/No-brainer-Conversion-to-Roth-IRA-24400-.htm
:
martin,

nice income jump..

Converting to Roth is not aways a no brainier; it also depends on what
your
financial situation will be at the retirement time.

Here are couple of websites that detail basic do's and don'ts of Roth IRA,
conversions, etc and what to stay away from:

http://www.rothirarules.net/roth-ira-investments.htm

http://www.rothirarules.net/roth-ira-conversion.htm

http://www.rothirarules.net/roth-ira-eligibility.htm

http://www.rothirarules.net
-------------------------------------
martin lynch wrote:

> I'm single, 32 years old, no dependents. I have $6,000 in a standard
> IRA.

> Income this year (including dividends from mutual funds and interest)
> will be $25,000.
> Next year, my income will be $200,000 (and will remain this way for
> the forseeable future).

> Is it pretty much a no brainer to convert the entire IRA to a Roth? I
> do have the cash on hand to pay the taxes on the conversion.

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[Phil Marti]

On Dec 26, 11:54�am, martin lynch wrote:

> I'm single, 32 years old, no dependents. � I have $6,000 in a standard
> IRA.
>
> Income this year (including dividends from mutual funds and interest)
> will be $25,000.
> Next year, my income will be $200,000 (and will remain this way for
> the forseeable future).
>
> Is it pretty much a no brainer to convert the entire IRA to a Roth? �I
> do have the cash on hand to pay the taxes on the conversion.

You look like a good candidate to me. Even in a high income tax state
you'd be looking at only a $1,500 tax bill.

More important is going forward. Starting next year you can convert
from traditional to Roth at any income level. So you could make a
$5,000 nondeductible (I assume) traditional IRA contribution and
immediately convert to Roth with zero effect on your taxes.

Phil Marti
Clarksburg, MD

[Ron Peterson]

On Dec 26, 10:54�am, martin lynch <odiegoo...@yahoo.com> wrote:
> I'm single, 32 years old, no dependents. � I have $6,000 in a standard
> IRA.

> Income this year (including dividends from mutual funds and interest)
> will be $25,000.
> Next year, my income will be $200,000 (and will remain this way for
> the forseeable future).

> Is it pretty much a no brainer to convert the entire IRA to a Roth? �I
> do have the cash on hand to pay the taxes on the conversion.

Don't bother. You won't be able to contribute to the Roth in the near
future, so you would be left with a small Roth account.

--
Ron

[Arthur Kamlet]

In article <c97ce607-4f7a-42c6...@s31g2000yqs.googlegroups.com>,

Ron Peterson <r...@shell.core.com> wrote:
>On Dec 26, 10:54�am, martin lynch <odiegoo...@yahoo.com> wrote:
>> I'm single, 32 years old, no dependents. � I have $6,000 in a standard
>> IRA.
>
>> Income this year (including dividends from mutual funds and interest)
>> will be $25,000.
>> Next year, my income will be $200,000 (and will remain this way for
>> the forseeable future).
>
>> Is it pretty much a no brainer to convert the entire IRA to a Roth? �I
>> do have the cash on hand to pay the taxes on the conversion.
>
>Don't bother. You won't be able to contribute to the Roth in the near
>future, so you would be left with a small Roth account.

However starting in January, you will be able to make a nondeductible
contribution to a traditional IRA and 30 milliseconds later convert it
to a Roth.
--

ArtKamlet at a o l dot c o m Columbus OH K2PZH

[Howard Kaikow]

On 12/26/2009 11:54, martin lynch wrote:
> I'm single, 32 years old, no dependents. I have $6,000 in a standard
> IRA.
>
> Income this year (including dividends from mutual funds and interest)
> will be $25,000.
> Next year, my income will be $200,000 (and will remain this way for
> the forseeable future).
>
> Is it pretty much a no brainer to convert the entire IRA to a Roth? I
> do have the cash on hand to pay the taxes on the conversion.

In your case yes.

If you leave the $6000 in the IRA, you have to pay taxes on all
withdrawals starting in about 38 years.

If you convert to a Roth now, you will only pay taxes on the $6000, not
on future earnings once moved into a Roth.

[Doug]

martin lynch wrote:
> Income this year will be $25,000.

> Next year, my income will be $200,000 (and will remain this way for
> the forseeable future).

Congratulations on completing your medical residency !

Doug