Pros and cons of converting Rollover to Roth

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drlkrisg
Posts: 1
Joined: Thu May 27, 2021 1:44 pm

Pros and cons of converting Rollover to Roth

Post by drlkrisg »

Hi all

I am a dual citizen, 50s, who has lived in the US my whole life and have a Rollover IRA as well as a traditional Roth that I plan to keep in the US when I move. I have heard it might be a good idea to convert the Rollover funds into a traditional Roth and pay those taxes now and I have heard not to do it. Can someone layout the pros and cons or is someone willing to share why they did what they did?

Note: I am not sure where I will end up living when I retire so that may be a factor.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Pros and cons of converting Rollover to Roth

Post by nelsona »

The reason TO do it is to avoid taxes later, when you *may* be in a higher income bracket (or might later have moved to canada).

The reason NOT to do it would be that you are in a high tax bracket now, and perhaps live a state with high taxes. Or you have already moved to canada, and doing such a rollover would break your roth for Cdn tax purposes.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Pros and cons of converting Rollover to Roth

Post by nelsona »

I chose not to, because I was in a high tax bracket my last year in the US, and didn't want to stay in US another year to have low income to do the transfer.

One thing that may affect your decision if, if married, you cannot pension-split IRA (including rollovers). Ypu can only split 401(k) and company pensions.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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