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What is the advantage of transferring to a Roth IRA?
In 1997, the Roth IRA was introduced. Since then, many people have converted all or a portion of their existing Traditional IRAs to a Roth IRAs, where interest earned may be completely tax-free. Is this a good option for you? A conversion has both advantages and disadvantages that should be carefully considered before you make a decision. This calculator estimates the change in total net-worth, at retirement, if you transfer your Traditional IRA into a Roth IRA.
Definitions
| Amount to transfer: | Amount to transfer from a Traditional IRA account to a ROTH IRA. It is important to note that some high income households do not qualifiy for a Roth IRA conversion. Currently, anyone with an adjusted gross income over $100,000 cannot make a Roth IRA conversion. For the purposes of this calculator, we assume that your income does not limit your ability to convert to a Roth IRA. |
| Non-deductible contributions: | Amount contributed to the Traditional IRA you are converting that was not tax deductible. |
| Current tax rate: | Current marginal income tax rate. |
| Tax tate at retirement: | Expected marginal income tax rate at retirement. |
| Investment tax rate: | Expected marginal tax rate (base this on expected capital gains rate) for investments. |
| Current age: | Current age. |
| Age at retirement: | Desired age at retirement. |
| Rate of return: | Expected rate of return on your investments. |