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Roth Conversion: The Perfect Age to Make the Switch

By Dan Caplinger – Feb 22, 2014 at 1:05PM

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Roth conversions are open to anyone with a traditional IRAs, but many never take advantage. Find out when the best time is to convert to a Roth.

Roth IRAs have huge tax benefits, and it's only been a few years since people of all income levels could take advantage of them through Roth conversions. But many people don't take advantage of the Roth conversion opportunity at the best possible time in their lives.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, talks about the best time to convert to a Roth. Dan notes that during your peak-earning years, the tax hit from a Roth conversion is sizable. But if you convert early in your retirement, you can take advantage of relatively low tax brackets to minimize the lifetime tax you'll pay on IRA distributions. By converting, you can avoid required minimum distributions that take effect at age 70 1/2, and Dan notes that can bolster your retirement assets in the long run.

Dan Caplinger and The Motley Fool have no position in any of the stocks mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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