Political, tax issues complicate Roth IRA conversion decision

Regardless of your age, you need to think about retirement savings. One consideration is whether to convert a traditional IRA to a Roth retirement account. (Photo by Dany Kurniawan)

Retirement is supposed to be a time of leisure. But getting enough money to enjoy post-work years is not so easy.

That’s definitely the case when trying to decide whether to convert a traditional IRA to a Roth IRA.

It’s an easier question for younger savers. They have more time for the tax-free Roth funds to grow and to recoup the taxes they had to pay on the conversion.

But if you’re older and starting to worry about a required minimum distribution (RMD) tax bill, thing get more complicated.

And the decision could be complicated now that Donald J. Trump will be returning to the White House, essentially guaranteeing that his Tax Cuts and Jobs Act cuts will remain in place.

Regardless of your age, or amount saved, it’s never a bad time to evaluate your retirement savings, how you can bolster them, and what the tax implications may be.

That’s why this weekend’s Saturday Shout Outs go to items looking at the pros and cons of traditional-to-Roth IRA conversions.

Let’s start with the political consideration.

Why the case against a Roth conversion gets stronger if Trump’s tax cuts continue, writes Mark Hulbert in this MarketWatch piece republished by Yahoo!Finance.

Still, that’s not dissuading some traditional IRA account owners.

Roth conversions may suddenly seem like a bad idea, but here’s why retirees are still considering them, writes Beth Pinkster, another MarketWatch financial journalist.

And then we have a specific tax calculation.

This is the best tax bracket for a Roth IRA conversion, advisors say, according to Kate Dore in her article for CNBC. No spoilers here; you’ll have to read Dore’s piece.

Personally, I’m not going to think about retirement and how to pay for it this afternoon. I taking it off to cheer on the Navy Midshipmen in their annual football battle against Army’s Black Knights.

Photo by Kay Bell

Here’s hoping you have an enjoyable Saturday (and rest of the weekend). Go Navy. Beat Army!

UPDATE, 5:35 p.m. CST, Saturday, Dec. 14, 2024:
Army 13 — NAVY 31. 

   
You also might find these items of interest:

• Ways to pay Roth IRA conversion taxes
• The great traditional IRA to Roth conversion debate
• Tax Turkey to Avoid #5: Not exploring a Roth IRA conversion

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