Converting to a Roth IRA from a traditional IRA may provide an excellent opportunity to build additional financial resources for your retirement years. In many cases, a person who uses the Roth to invest with post-tax dollars is much better prepared for retirement than the individual who does not.
If qualified, deducting your traditional IRA contribution allows for an immediate tax benefit. Contributions to traditional IRAs are tax-deferred and are later taxed at whatever the individual’s income tax bracket is at the time of withdrawal. (A 10% penalty may apply if these withdrawals are made before the age of 59 1/2.) Roth IRA contributions, however, are paid with after-tax dollars and will never be taxed again -- provided the investor follows specified government regulations. All profits earned inside a Roth IRA accrue tax-free for retirement.
