Will converting to a ROTH IRA guarantee a Happy Retirement?So, you’re thinking of doing a ROTH IRA conversion, you might want to take into consideration changes that may happen over the next few years with the tax code.

I’m not saying it will happen, but only something to take into consideration.  Tax reform will reduce income tax rates for individuals which will be offset by cutbacks in credits and deductions.

That is the big questions you have to ask yourself when doing a conversion. Will I pay more in taxes now or later? In the current tax system am I in a lower bracket now or will it be better to wait?

If you expect that the tax rate you will pay in retirement will be the same as or higher than the tax rate on the conversion, then switching an IRA to a Roth earlier makes more sense. However, if you will be in a lower bracket then it makes it less appealing.

Many people speculate that tax rates will rise in the future to help reduce the deficit, but that assumption may be incorrect. The top rate is likely to be around 28%.

We know that this can be challenging to determine what the best strategic move is for now and in the future. We have a team of professionals waiting to serve you and answer any questions you may have. Stop by your local Liberty Tax® office and see if now is the time to convert.

David Rocci 


Disclaimer: Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.