Your next steps
  1. 1.

    Do you currently have money in a retirement account, such as a Traditional IRA, Rollover IRA, old 401(k), or other employer-sponsored plan?

    Why this matters
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    If you have money in at least one eligible retirement account listed here, or in a SEP-IRA or SIMPLE IRA,* you may be able to convert to a Roth IRA. Conversion could offer unique benefits, but keep in mind that whether it’s right for you depends on your personal situation and your financial goals. *SIMPLE IRAs can’t be converted until two years after they’ve been established.
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  2. 2.

    Do you have only one Traditional IRA with only post-tax contributions?

    Why this matters
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    If you’ve made only after-tax contributions (also known as post-tax or nondeductible contributions) to a Traditional IRA, you’ve already paid income taxes on those contributions and won’t be required to pay taxes again to convert those funds to a Roth IRA. However, your earnings on those funds will still be taxed.
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  3. 3.

    Are you planning to leave some or all of your IRA assets to your heirs?

    Why this matters
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    If you don’t think you’ll need to access your IRA for retirement expenses, a Roth IRA offers some unique estate planning benefits. You won’t have to take required minimum distributions (RMDs), and your beneficiaries can make income-tax-free withdrawals during their lifetimes.
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  4. 4.

    Do you have at least five years before you plan to access your converted IRA funds?

    Why this matters
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    Leaving your assets in your converted Roth IRA for at least five years gives you more time for potential tax-free growth, and it can help you recoup the costs of conversion. Additionally, if you’re under age 59½ and you need to access the funds you convert in fewer than five years, you could be charged an early withdrawal penalty.
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  5. 5.

    Do you think your income tax rate when you make your first withdrawal of the converted funds will be higher or lower than it is at the time you convert?

    Why this matters
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    If your income tax rate when you make your first withdrawal is lower than it is now, you’d pay less in taxes by not converting to a Roth IRA. However, whether you estimate that your future income tax rate will be more, less, or about the same as it is now, it’s also important to consider that tax laws may change over time, and they will be a critical factor in how much you’ll pay in taxes in the future.
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  6. 6.

    If you convert, can you afford to pay all of the conversion taxes from a non-IRA account?

    Why this matters
    Close
    If you convert to a Roth IRA, you’ll need to pay income taxes on the amount that you convert. Using your IRA funds to cover these taxes will considerably diminish any benefits you’d get from converting.
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