Roth IRA Conversion: A Smart Move Right Now?

Converting an IRA to a Roth can be a good way to reduce your long-term taxes, but is now the best time to do one?

Dan Caplinger
Dan Caplinger
Jan 11, 2014 at 6:43PM
Investment Planning

Retirement planning can be complicated, especially with all the complex rules governing tax-favored retirement accounts. But it can be well worth the effort to take advantage of smart planning opportunities in order to make the most of your retirement savings. One strategy to consider involves converting existing retirement accounts to a Roth IRA.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at Roth IRA conversions. Dan notes that even though you pay tax on the converted amount, you don't have to pay tax on future income and growth within the Roth IRA. If you're in a low tax bracket now, converting often makes sense. But Dan notes that it also makes a difference what investments you own, as the ideal time to convert is when asset prices are low in order to minimize your immediate tax liability. Dan notes that for investors in SPDR Gold (NYSEMKT:GLD) and MarketVectors Gold Miners (NYSEMKT:GDX) or mining stocks Newmont Mining (NYSE:NEM) and Goldcorp (NYSE:GG), current low levels might make now a great time to convert an IRA that owns those stocks.