Thursday, September 16, 2010

Major column on how Roth IRA's work available this morning

Michelle Singletary (“The Color of Money”) has an article in the Washington Post, Sept. 16, “Path to converting savings to Roth IRA’s is full of ‘ifs’”, link here.

The basic appeal of Roth IRA’s is that generally the withdrawals are not taxed. But taxes are paid upon deposit, but for some high wage earners entering retirement they make for effective financial strategy.

Singletary explains the changes that took place at the beginning of 2010, removing some income limits for converting a traditional 401(k) to Roth. But there is no “simple truth” as to how to use these. A financial planner or tax professional will have to run numbers and simulate your net worth in different scenarios.

The individual can try a do-it-yourself approach with calculators and software, such as here.

ING (Minneapolis) has an effective page on how Roth’s work here.

Massachusetts Mutual has a collection of calculators, including a Roth, (website url) here.

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