Three Roth IRA Conversion "Show Stoppers"

Effective January 1^st this year, the $100,000 modified adjusted gross income barrier for converting traditional IRA accounts to Roth IRA accounts was eliminated. Now that the floodgates are open and everyone can convert their traditional IRA's to Roth IRA's, if you haven't done so already, should you jump on the bandwagon? While the potential benefits of tax-free withdrawals and not being subject to required minimum distributions ("RMD's") (See Year of the Conversion) are extremely attractive, there are several obstacles one must overcome before switching horses.

Before discussing these obstacles, which will be continued in next week's blog post, it's important to keep in mind that when contemplating a Roth IRA conversion, it doesn't have to be an all-or-nothing event. You can, and it's often preferable, to do partial conversions of traditional to Roth IRA's over one or more years.