Considering a Roth IRA Conversion? 6 Reasons It Makes Sense

Avoiding possibly higher taxes in retirement, having no RMDs and the markets being lower are just three 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.

Here are six reasons why a Roth IRA conversion may make sense.

Kevin Webb, CFP®
Financial Adviser, Kehoe Financial Advisors

Kevin Webb (opens in new tab) is a financial adviser, insurance professional and Certified Financial Planner™ at Kehoe Financial Advisors (opens in new tab) 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.