Roth IRA Rollover or Not?

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Roth IRAA key component to successful investing is determining how to position assets for maximum return after taxes.  It matters not what you make; it matters what you keep.  Did you know that as of January 2010 you are able to convert your Traditional IRA to a Roth IRA, regardless of your income levels? Roth IRA’s allow your retirement savings to grow Tax-Free instead of Tax-Deferred.

The Tax Increase Prevention and Reconciliation Act of 2005” (“TIPRA”), which went into effect as of January 2010, this means you may be able to convert some or all of your retirement accounts into a Roth IRA.   Prior to 2010, there were income limits restricting the possibility of conversions.

Money in a Roth IRA can grow and be distributed Tax-Free as long as distributions are not taken within 5 years of the conversion, and not before age 59 ½ .  You also don’t have to worry about taking Required Minimum Distributions (RMD) when you reach age 70 ½ as you do with a Traditional IRA.

When a Traditional IRA is converted to a Roth IRA, you will have to pay taxes on some or all of the converted amounts (i.e. contributions and earnings that haven’t already been taxed)

The rules for conversion can be complex, and state and local income-tax rules for conversions may differ from federal rules.  There are several variables involved when doing an analysis, and many financial and analytical tools and resources are required in order to see if this opportunity would be beneficial to you. For more information about the different types of IRAs and Rollover rules, visit the IRS at and search for the topic that interests you.

I strongly encourage you to speak with your local accountant or financial advisor about these issues, as they are complicated and require a careful review of your financial situation. While this strategy could make sense for many people, you need to ask about your current and future tax projections, possible tax law changes in the future, whether you expect to rely on social security, your ability to stomach the prospect that years later your portfolio might go down after you’ve paid taxes on the savings, and your time-line for retirement. There are many unknowns involved, so ultimately, the answer to whether you should roll over into a Roth IRA is both mathematical and political.


Bradford Pine Wealth Group and Bradford Pine do not provide legal or tax advice.For legal or tax advice, please seek the services of a qualified professional.

For more detailed information about rolling over your 401(k) or about managing your IRA, I highly suggest downloading my free eBook, “10 Tips You Need to Know About Your IRA Rollover”. This short book is packed with critical information that will help you make the right decisions about your retirement savings.


Written by Bradford Pine
Bradford Pine Wealth Group – New York City Financial Advisors

The views and opinions expressed in an article or column are the author’s own and not necessarily those of Cantella & Co., Inc. It was prepared for informational purposes only. It is not an official confirmation of terms. It is based on information generally available to the public from sources believed to be reliable but there is no guarantee that the facts cited in the foregoing material are accurate or complete.

Comments may not be representative of the experience of other investors. Investor comments and experiences are not indicative of future performance or results. Views and opinions expressed in the comments section are the author’s own and not those of Cantella & Co., Inc. No one posting a comment has been compensated for their opinions.

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