Roth IRA - Nine Reasons it is the choice

Disclaimer and Warning - From Bob Parrish CPA, P.C.

Remember........"You can have everything in life you want, if you just help enough other people get what they want." -Zig Ziglar.

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The Question: What are some reasons I should choose the Roth IRA?

1) As a hedge against taxes rising in the future

2) By paying taxes on contributions now, you avoid paying taxes in the future on the largest portion of the account, the earnings.

3) With no required minimum distributions, you can extend the period of tax deferral on earnings that ultimately will be paid tax-free to you and/or your beneficiary.

4) If your income is rising or has stabilized, converting now would trigger a lower tax cost over maintaining the funds in a traditional IRA and paying taxes on a full distribution later.

5) You are permitted to do a no-penalty transfer (also known as recharacterization) back to the traditional IRA if you discover you are ineligible to convert based on AGI. You may also transfer back without penalty if the converted amount declines in value following the conversion. For example, assume you recently converted $100,000 from a traditonal IRA to a Roth IRA. Due to market volatility, however, the conversion amount is now worth $67,000. You can recharacterize the $67,000 by transferring it back to the traditional IRA and then turn around and reconvert that amount to the Roth IRA, thus reducing your tax liability. You can reconvert only once each calendar year.

6) If you have charitable deduction carry forwards, investment tax credits, educational tax credits, or any reportable losses, you may be able to further reduce the taxable amount of your conversion.

7) The dollars used for the payment of income taxes will no longer be part of your taxable estate.

8) You can elect a different beneficiary from the one on your traditional IRA.

9) Roth IRA assets may be used to fund a unified credit bypass trust.

I shall always strive to accomplish your goals, and to keep your planning in balance. You will find no other adviser or groups of advisers that has your potential and your security more in focus than I.

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Very truly yours,

Bob Parrish CPA Engagement Manager