Move to Tax-Free Investing with a 2010 Roth Conversion
You Could Benefit from Roth IRA 2010 Changes
The Roth IRA has long been considered an ideal tool for growing wealth – investments grow tax-free in a Roth IRA and all qualified withdrawals are tax-free after the age of 59 ½. Plus, in contrast with a Traditional IRA there are no required distributions at 70 ½.
It is the perfect retirement investment vehicle for many – but there is a catch (isn't there always a catch?). You can only take advantage of the Roth IRA if you met income limitations.
However, changes are coming in 2010 that could open the Roth IRA to everyone.
Beginning in 2010 the Roth Conversion means No Restrictions
Beginning in January 2010, converting your Traditional IRA to a Roth IRA, is easier than ever with added benifits. The Modified Adjusted Gross Income (MAGI) limits on a Roth IRA will be lifted for conversions. This is exciting news to investors who have wanted a Roth IRA, but were never eligible.
Discover how you can benefit from new 2010 Roth IRA conversion eligibility rules...
Why consider a Roth IRA in 2010? Roth IRA advantages include tax-free profits and no required distributions
If you're trying to decide whether converting to a Roth IRA in 2010 is the right decision for you, you should consider the benefits of a Roth account. Depending on your situation, a Roth IRA can offer benefits not found in other types of retirement accounts.
Roth IRA Advantages
Qualified withdrawals are tax-free
Investment profits compound tax-free
No required withdrawals
May be able to pass on earnings to beneficiaries tax-free
With the Roth IRA 2010 limits changing, your benefits are greater than ever!
Reducing Tax Exposure for Your Portfolio Makes Big Difference
The main benefits of the Roth IRA, such as tax-free investment profits and tax-free withdrawals, can have a dramatic affect on your wealth. For example, if you were to contribute $4,000 a year to a Roth IRA iin 2010 and assume an 8% compound interest rate of return for 30 years, your IRA would be worth $449,113 at the end of year 30.
If you made the same investment outside of a Roth IRA in a non-tax sheltered environment, assuming a 31% tax rate, it would only be worth $286,752 instead of $449,133.
That is 43% less, a difference of $162,381.
Disclaimer: Before converting an existing retirement account, be sure to talk with your tax professional to make sure you have a clear understanding of how the tax rules would affect you.
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