Vincent Vicidomini is a Managing Director in Mesirow Fiduciary Solutions In his role he is responsible for developing new relationships with recordkeepers third-party administrators broker-dealers advisors and defined contribution investment only firms He regularly consults with leadership teams regarding fiduciary program development ways to mitigate risk through outsourcing and establishing…

As stocks dip this year some investors are taking advantage of the market volatility by converting their traditional pre-tax IRAs to a Roth IRA Why Because the decline in the current market value of the Traditional IRA means a reduced tax liability upon conversion, How a Roth IRA works, Roth IRAs are similar to traditional IRAs except that Roth contributions are “after-tax” which means you pay taxes on your contribution upfront Consequently withdrawals from Roth IRAs are tax-free meaning that your investment earnings and growth are never taxed Traditional pre-tax IRA contributions are not taxed upfront so they can help you reduce your current taxable income and are taxed when…, Key advantages of a Roth IRA, The ability to withdraw money tax-free including the earnings This appeals to anyone who wants to minimize their tax bite in retirement or believes that taxes will be higher later than they are now There are no annual required distributions from a Roth IRA (as there are for a traditional IRA The ability for wealthier taxpayers to maximize assets and minimize taxes for their heirs A spouse…, How to convert to a Roth IRA, All taxpayers regardless of income can convert some or all of their traditional pre-tax IRAs to a Roth IRA During a “Roth conversion” you elect to pay income taxes now on a portion of your pre-tax accounts These amounts are then transferred into a Roth IRA account where they are treated as a regular after-tax Roth IRA Additionally during a Roth conversion income taxes are only calculated on the…, Why now might be a good time for a Roth, This strategy may be particularly valuable in today’s market conditions In difficult economic periods such as the current volatile market the value of your pre-tax traditional IRA may have declined By converting a portion of this account to a Roth you may pay taxes on a smaller market value As your portfolio recovers the Roth IRA and all future growth will be forever tax-free Today’s market…