Seventy-three percent of Baby Boomers who own a traditional IRA are not planning to convert it to a Roth IRA in 2010, when the previous household income limit of $100,000 will be eliminated,
Among households with an income of $100,000 or more, 57% don’t even know that the income limits on Roth IRA conversions will be eliminated. Sixty-two percent don’t know that if they do make the conversion, the money will be subject to tax.
“There may never be a better time than in 2010 to create a tax-free income stream for retirement,” said Terri Kallsen, senior vice president at USAA Wealth Management. “The combination of lower account values, historically low income tax rates, conversion income limits lifting and the ability to pay the tax bill over two years provides a rare opportunity to potentially increase your income in retirement by hundreds, and even thousands, of dollars each month by eliminating taxes through a Roth IRA.”