5 reasons to consider a Roth IRA conversion in your 50s.
If you aren’t earning much, saving in a Traditional IRA, pre-tax doesn’t help you save much in taxes. Conversely, doing a Roth IRA conversion when you are earning a larger salary doesn’t make sense to a lot of people who are looking at retirement in the near future, when their tax rates will plummet. Why pay higher taxes when relief is available through a Roth IRA conversion.
Like everything else there is plenty of exceptions available in the IRS tax code. Here are 5 situations when converting a tax-deferred Traditional IRA to a tax-free Roth IRA may make paying the tax privilege to do so a bigger advantage for your long-term financial plan.
Reason 1: YOU WANT TO LEAVE A LEGACY
If you want to leave a substantial legacy to your children or grandchildren a Roth IRA may help you meet that goal over time. Your heirs will be required to take a tax-free distribution throughout their life on the earnings of the Roth IRA as a beneficiary. So basically, your heirs will receive an annual tax-free bonus to remember you by. In this situation the primary goal is to position the Roth IRA to provide tax-free income for heirs, not to relieve a personal tax burden.