A taxpayer currently has $ 20,000 in a traditional deductible IRA account. She comes to you for advice about whether to convert the $ 20,000 into a Roth IRA account. The taxpayer faces a current tax rate of 28%, and she expects to face the same rate when she retires in 40 years. She is currently earning 12% per year pretax in the deductible IRA, and she expects to continue to earn this pretax rate of return regardless of whether she is investing in a deductible IRA or a Roth IRA. Should the taxpayer convert into a Roth IRA? Assume any taxes due on the conversion are paid from non IRA funds. Be explicit about any assumptions you make in advising the taxpayer.

  • CreatedAugust 06, 2015
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