Six Reasons a Roth IRA Conversion Makes Sense

Avoiding higher taxes in retirement, having no RMDs and leaving your heirs a tax-free inheritance are just some of the reasons to switch to a Roth IRA.

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A Roth IRA is a great retirement vehicle to consider. There is no tax deduction for contributions, but withdrawals are tax-free. This offers an opportunity for sizable investment gains over the lifetime of the account that will never be taxed.

This contrasts with a traditional IRA, where a tax deduction is available on contributions, but withdrawals are taxed later. While there are income limits for contributing directly to a Roth, there is no income limit to be able to do a Roth IRA conversion. When situations are favorable, you can decide to move all or a portion of your IRA into a Roth IRA, pay taxes on the amount moved and have tax-free withdrawals from the Roth IRA. To get the most benefit, taxes should be paid with cash and not with the IRA funds.

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Kevin Webb, CFP®
Financial Adviser, Kehoe Financial Advisors

Kevin Webb is a financial adviser, insurance professional and Certified Financial Planner™ at Kehoe Financial Advisors in Cincinnati.  Webb works with individuals and small businesses, offering comprehensive financial planning, including Social Security strategies, along with tax, retirement, investment and estate advice. He is a fiduciary, ensuring that he acts in his clients’ best interests.