Commentary: Converting an IRA to a Roth carries risks

11/29/2012 | Nerd's Eye View blog

Before converting a traditional IRA to a Roth in response to a potential tax-rate increase, it's important to consider several "downside issues," Michael Kitces writes. A large conversion could increase the client's tax rate more than a future increase would, he writes. It's also possible that tax changes could affect income and value-added taxes in a way that would make a conversion unfavorable, he writes. It's usually better to convert most of an IRA, rather than all of it, to a Roth, Kitces writes.

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