Life is like a wheel with different areas such as financial, relationships, physical, emotional, professional and spiritual as the different spokes of the wheel. A wheel moves the most efficiently when all spokes are strong and balanced. When one spoke is not in balance with the rest of the wheel, it will ensure a bumpy ride, and no matter how strong the other spokes are, sooner or later, they will all be hindered and damaged by the sick spoke.
The weakening economy and crashing wall street left many people with a damaged spoke in their wheel of life. If unattended, the damage won't cure itself and further will impact the operation of other spokes. Why do we have to do anything? First all, what does the history tell us? From the crash of 2000, now 10 years later, has it proved that the market loss will fix itself? How many have used the strategies of old decades and come out a winner? NONE. Second of all, time has changed, rules have changed. To succeed in today's environment, we got to play by the new rules. Third of all, does one tell himself that it doesn't hurt when his foot got shot or does he stop to take the bullet out and nurse the wound right away? It is a matter of keeping the foot or losing the leg. Shall we dress the wound now?
If this seems like an opportunity you want to explore, it makes sense for you to meet financial and tax professionals to evaluate your situation. Expect your professionals to help you:
- Evaluate whether this is the right move for you,
- Understand the amount you would need to pay in taxes upon conversion,
- Make sure you have funds outside the IRA to pay the taxes,
- Plan whether you should do this all in 2010 or spread it out over time, and
- If you choose to move your Roth IRA funds to a new provider, ensure that your funds move safely from your old provider to your new provider via a trustee-to-trustee transfer.
Where to Find More Information?
The tax treatment of IRAs is a complex subject that is thoroughly discussed in IRS Publication 590. We recommend that you obtain a copy of this publication from the IRS website, www.irs.gov, and study it. Any discussion of the tax treatment of IRAs in this brochure merely touches on some key points and cannot hope to duplicate the thoroughness of the IRS publication.
