I'm certainly not a financial planner but am also in my 50s and looking forward to retirement. One thing I've read about a Roth is that it is recommended if you might have a higher tax bracket in retirement than you do now. Do you think that will be the case? If not, I'd stick with the traditional IRA.
You aren’t too old, that has nothing to do with a Roth. There are 2 things to consider-
There is a income limit. If you make more than that you can’t do a Roth. Sorry I don’t know but it more than $150,000
You have to have earned income (not pension, interest, or SS). Your Roth can not exceed this amount
Yes, this!Actually, you can do what is known as a "backdoor" Roth contribution with effectively any income level- it just requires that you make the IRA contribution initially to a traditional IRA first, and then you convert it to your Roth IRA account.
You may also have the option of a Roth account within your Employers 401k or 403b set up instead of the more traditional pre-tax options, so you should look into both possibilities.
Actually, you can do what is known as a "backdoor" Roth contribution with effectively any income level- it just requires that you make the IRA contribution initially to a traditional IRA first, and then you convert it to your Roth IRA account.
You may also have the option of a Roth account within your Employers 401k or 403b set up instead of the more traditional pre-tax options, so you should look into both possibilities.
We're in the group of people who will make more money in retirement, thus moving to a higher tax bracket. It's the price we pay for being good savers.
Be aware that, when you do this, you have to pay taxes on the amount converted. That might be obvious to some, but I wanted to be clear on that. Lat year, DH converted $50k from an IRA to a Roth, on the advice of our accountant. It turned out we had a large tax bill in April--ouch! But, we've agreed that the Roth will be the last thing we touch, ever. We hope to leave the money to our kids in 30-something years, plus all the accrued (non-taxable) gains. we might convert more in the future, but we'll have to be ready for the big tax bite.
We consulted our Financial Planner on CPA on rolling over our IRA's into Roths. Made ZERO economic sense at our age. We would have lost 1/3 of what we had saved and earned to taxes. I without taking MORE money out of the IRA, there would have been no way we could have afforded that tax hit. But we started our IRAs in 1979, and with additional contributions, 401k rollovers, and investment returns. And we were in our 50's at the time. No problem with starting a Roth, not so sure everyone can benefit from rolling over into a Roth.
... Don't have to start taking distributions at 70 1/2 like with a standard IRA,
you might have a higher tax bracket in retirement than you do now. Do you think that will be the case? If not, I'd stick with the traditional IRA.
At this point you can also consider putting you money into CD's as rates are going up.. .
I am not planning to need my Roth at all and plan to pass it on to my kids as an inheritance.
Will you have heirs? A Roth might be a good way to get them some money, tax-free. If you die with a regular IRA, heirs will have to pay taxes on any withdrawals. Just something else to consider.
you have to pay taxes on the amount converted. That might be obvious to some, but I wanted to be clear on that.
True, every situation is different. For better or worse, my MIL died last year, leaving DH with 7 (!!) IRAs--6 of them traditional, 1 Roth. So, we are now awash in RMDs (required minimum distributions), and it will only get worse when DH turns 70 1/2. This sounds like a "good" problem to have, but the majority of his inheritance is locked up in the IRAs, and we have to tread carefully to avoid getting hosed on taxes. OTOH, if we work it right, we can have a very comfortable retirement, fund college for our two remaining youngsters, and leave a nice bit to the kids.