As we've mentioned before, if you're out of work or self-employed and losing money, this may be an ideal time to convert an existing traditional IRA to a Roth IRA.
Why would that be? Simply put, a business loss or your lack of gainful employment can reduce or eliminate income taxes that would otherwise be due at conversion.
Briefly, the primary benefits to a Roth IRA are twofold:
- The earnings accumulate tax free
- The distributions are also tax free
Roth IRA's are attractive to younger taxpayers as well. Think about this. If you start socking away the max Roth IRA contribution at age twenty-five, you'll have a cool million bucks at age sixty-five. Better yet, the distributions will be tax free. That'll mean you can get some fries AND the Big Mac.
Oh come on. Do you really believe you can print trillions of dollars without triggering just a tease of inflation? Betcha a Pepsi will cost at least fifty bucks.
Call your broker or your tax guy. Do it today.
Brief overview of Roth IRA.
*Nothing over which CONgress has control is necessarily forever. It would not surprise TWC to see the Roth IRA program scrapped in 2010.