If you've been taking a long, hard look at your retirement planning options, one of the questions you may have is whether it makes sense to convert a traditional individual retirement account to a Roth IRA. Answering this question depends on a careful analysis of the upsides and downsides of doing so - and keeping your individual circumstances in mind throughout the process.
Fortunately, this isn't something that you have to do unaided. There are a wide variety of sources available on the web which can provide you with the information you need as well as the opinions and expert analysis of industry insiders. With a little guidance from financial experts, you may be able to get a pretty good idea of how much you may want to convert from a traditional individual retirement account to a Roth account even without the assistance of a calculator tool, although this is something which you may want to use.
You can find Roth calculators on quite a few different websites, including financial industry sites like Scottrade and Bank of America, among others. A well designed calculator should account for important factors like minimum distributions and maximum contributions depending on your income, but keep in mind that many of these tools will not provide you with a side by side comparison of traditional versus Roth individual retirement accounts.
One thing which has made Roth accounts a particularly attractive option are the much more flexible contribution limits associated with this type of individual retirement account. Depending on your income and other individual factors, you may or may not meet the eligibility requirements for opening one of these accounts - and for this and other reasons, there are differences of opinion about whether Roth calculator tools are useful, even among financial experts. While no one seems to take a strong stand against using them at all, some have said that the figures you'll get from one of these calculators should be used only as a rough guide - in other words, you'll want to gather information from other sources as well before making your decision.
There are some more full features Roth individual retirement account calculators out there which can give you a much better idea about what you would stand to gain by converting your traditional IRA to Roth. The better calculators allow you to walk through different scenarios to look at whether you'd be better off converting your IRA. Some even offer rollover calculation which allow you to look at your options regarding any employer sponsored retirement account you may have.
Making the call about whether to convert your IRA is an individual choice, but it's one that you should get all of the relevant information about ahead of time. The more you know, the better prepared you'll be to make the right decision about your retirement accounts.
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