Converting a traditional IRA to a Roth IRA could be a prudent move for some people because it may provide significant tax advantages in retirement. But when are the optimal times to do a Roth conversion?
First, let’s look at some pros and cons of a Roth conversion. Unlike a traditional IRA, which is funded with pretax money, qualified withdrawals of a Roth IRA are tax-free. Another difference from traditional IRAs is that Roth IRAs aren’t subject to required minimum distributions, or RMDs (unless inherited), thus reducing your taxable income in retirement.
