Q&A: Time to convert to a Roth IRA?

December 19, 2008

I am 77 and have been retired 25 years. I have $1.5 million in my IRA, and I take out $4,500 a month for living expenses. Would it be wise to convert my IRA to a Roth IRA?

Q: I am 77 and have been retired 25 years. I have $1.5 million in my IRA, and I take out $4,500 a month for living expenses. Would it be wise to convert my IRA to a Roth IRA?

A: You can only convert to a Roth IRA if your income is less than $100,000, although in 2010, that rule will be lifted to allow anyone to convert to a Roth, regardless of income. By converting to a Roth, you trigger taxes on the entire balance of your account, most of which would be taxed at the highest marginal tax bracket. You would probably be wise to keep doing what you're already doing. The most significant benefit of a Roth conversion at your age would be to give your future heirs years of tax-free income; the Roth conversion at age 77 will mostly benefit your progeny.