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Strategies & Market Trends : Income Taxes and Record Keeping ( tax ) -- Ignore unavailable to you. Want to Upgrade?

To: Investor2 who wrote (809)	3/28/1998 8:01:00 PM
From: Nittany Lion	Respond to of 5810

Investor2, I'm not so sure, however, that converting is such a great idea. I'm in agreement with you on this. Without being too cynical, who knows what Congress will do two years from now let alone ten or twenty years down the road. What might seem logical under today's tax laws could turn out to be detrimental later on. What if you pay 28% or higher the next four years to convert only to wake up to a 15% flat tax five years from now? I know individuals who invested in EE bonds for their children's education 6 or 7 years ago expecting to cash them tax free only to find that their income was too high now to take advantage of this. The trouble with tax planning these days is that we live in a very dynamic world - nothing ever stays the same. Gary

To: Investor2 who wrote (809)	3/28/1998 10:05:00 PM
From: Colin Cody	Read Replies (3) \| Respond to of 5810

"The short-term tax consequences of conversion could be significant. In my case, converting would be the equivilent of giving state and federal government thirty-some percent of my savings"... . This could be true for most taxpayers. You need to weigh the tax benefits which include: Eliminating cash from taxable sources (you need to pay the tax) Eliminating assets from your taxable estate. (offset by item below) NO federal income taxes will be due on most any FUTURE earnings of the investments within the Roth IRA. When you retire and start withdrawing, you will need to withdraw LESS each year (because you don't have the taxes to pay) and therefore the IRA balance with GROW tax free returning to you even more funds availability. Colin