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Is A Roth Right For You?

New Roth IRA Rules May Help Your Retirement Get Back On Track
By Don Sadler

The falling stock market has made it a rough couple of years for many retirement investors, including self-employed individuals.

But here’s some good news that might help cushion the blow of retirement account losses: The benefits of a Roth individual retirement account (IRA), which have been inaccessible to many self-employed individuals and micro-business owners, may finally be within your reach.

Both traditional and Roth IRAs may have a place in your retirement portfolio, but Roths offer unique benefits that sometimes make them a better choice.

The main advantage is that withdrawals from Roth IRAs are made tax-free in retirement. In contrast, you must pay taxes on traditional IRA withdrawals at your ordinary income tax rate after you retire. Depending on your financial goals, this could make the Roth IRA a more attractive option.

However, if you earn too much money, you can’t open or contribute to a Roth IRA. The modified adjusted gross income limits for 2010 are $120,000 for single filers and $176,000 for married couples filing jointly—limits that are exceeded by many self-employed individuals.

And before this year, converting a traditional IRA to a Roth IRA was prohibited for anyone earning more than $100,000 a year.

That changed on Jan. 1, 2010.

Starting this year, anyone (regardless of income) can convert their traditional IRA to a Roth IRA. But should you take that step? This article will help you weigh the pros and cons.

Tax Implications Of Roth Conversions
Suzanne Durbin, chartered financial consultant, financial advisor and partner with GV Financial Advisors in Atlanta, Ga., has been advising clients about Roth conversions...