Roth IRAs To Plan For Retirement–Converting A Traditional IRA To A Roth Account

Numerous investors are turning to Roth IRAs as a way to plan for their retirement needs, but there are both pros and cons of this form of retirement account which can either be beneficial to men and women who are investing or could cause other options to be more lucrative for a potential investor’s retirement goals and needs. However, there are many men and women who have used options to convert a traditional IRA to a Roth account over the past months as there have been a tax benefit offered for doing so, which has allowed for investors to convert a traditional IRA to a Roth account to spread out the tax payments they must meet if their conversion situation warrants these payments.

Yet, Roth IRAs have been a popular choice for many simply because they will allow the investor to withdraw funds later in life from earnings at no cost. These tax-free withdrawals are, obviously, one of the main attractions of a Roth IRA as investors who may plan wisely and receive a great deal of earnings in the Roth IRA will be able to use this money without paying taxes during their retirement years, which simply equates to more money at a time where there is no income from an employment situation.

Obviously, retirement accounts through Roth IRAs are not the only opportunity that investors have, as many use this account as one of multiple retirement planning options. However, when it comes to converting from a traditional IRA, investors have had to weigh how this will affect their goals and savings as a traditional IRA contributions can be written off on an individual’s taxes, but withdrawals later in life are taxed.

Yet, an article on Kiplinger.com spoke of how converting from a traditional IRA to a Roth account, or opening a traditional IRA to convert to a Roth IRA before April 18, 2011 can be beneficial for individual investors who may be later into their retirement planning life. The article made mention of individuals who may make too much money to contribute to a Roth IRA, but recent rules on converting to a Roth IRA from a traditional IRA has led many individuals in this situation to open a traditional IRA and then convert to a Roth account.

Currently, income limitations on converting to a Roth IRA have been suspended, so some individuals have used the opportunity to open a traditional IRA, contribute a set amount of money, usually as an alternative retirement plan, and then convert to a Roth IRA in the hopes of acquiring extra funds for retirement which can be withdrawn tax-free. This is not an option that is available to or beneficial for every individual’s retirement portfolio, but for those who may have had these income restrictions that prevented them from contributing to a Roth IRA, current conversion opportunities can offer investors the opportunity to further diversify or begin the diversification of their retirement planning goals through a Roth IRA option.