Why Would You Do An Ira Rollover To A Roth?

When you complete a traditional IRA rollover to a Roth account, there are several things that you should be aware of. The law currently requires that your modified adjusted gross income or MAGI be less than $100,000 annually, but that is about to change. Here you can read about the advantages of Roth-IRAs and possible disadvantages, as well. Ive also included a little bit of investing advice.

Advantages
There are no taxes on qualified distributions. That is the biggest advantage and the reason most often cited for conducting an IRA rollover to a Roth.


Distributions from traditional accounts are taxed as regular income. So, if you are in the same income tax bracket at both the time of contribution and the time of distribution, you are likely to realize a benefit. If you are in a higher tax bracket after retirement, you will definitely realize a benefit.

Other advantages include the following:
Participants are not required to begin taking distributions by age 70 , as they are in traditional accounts.

Direct contributions may be withdrawn at any time, once a seasoning period has passed, which is currently five years.

Earnings within the account will never be subject to income taxes, so if you make some good investment choices, that could be a big bonus. While earnings within a traditional account are not typically subject to income taxes or capital gains, they are subject to income taxes at the time of withdrawal.

The full amount of conversions may be withdrawn at any time, without taxes or penalties, once the seasoning period has passed.

A Roth-IRA is more like a traditional savings account, since you have easy access to the funds, but unlike a regular savings account, interest earned is not taxable.

Disadvantages
The biggest disadvantage of an IRA rollover to a Roth is that taxes must be paid on the converted amount, at the time of conversion. Since, you received a tax deduction or made pre-tax contributions to the traditional account, you will be required to pay some taxes at this time. Currently, only retirement investors earning less than $100,000 per year can make a conversion. The limitation will be lifted, at least temporarily, in 2010, unless the law changes. Thats another disadvantage, you never know if the laws will remain the same.

Advantages of Self-Directing
If you are considering an IRA rollover to a Roth, now is the time to think about self-directing. Self-directing offers investors more options and unlimited returns. Only about 5% of all account holders choose to self-direct, because they think it would be more difficult and time consuming. Let me tell you a little bit about another option.

An Option to Learn More About
There is a sector of the real estate market that has been largely ignored due to the over-building of higher priced homes and no new construction of affordable housing. This is an area where converting an IRA rollover to a Roth can benefit you, middle income families and entire communities. You might want to learn more about it. You can learn about a simpler more TURNKEY approach to real estate and IRAs by clicking on the url at the foot of this article, and going to my website. You will find much more information there.

By: Gordi

Article Directory: http://www.articledashboard.com

Gordon Hall is an active participant of a national network of professional writers, who advocate socially conscious real estate investing, through the use of retirement vehicles such as IRAs, 401Ks and other retirement assets. For more information, or to get involved, please visit the following www.double-your-ira.com