Moving from a Traditional to a Roth IRA is something that should be carefully planned and executed. You may want to talk with a CPA or other tax professional before executing this move as it will immediately create a taxable event that may impact your federal or state tax brackets. The long-term benefit is that you won't have to pay taxes on IRA distributions down the line. However, this move isn't for everyone and should be carefully researched ahead of time.
It may be best to process partial Roth IRA conversions so that you can spread the federal and states out, as Roth IRA conversion amounts as subject to taxes in the year of conversion.
On another note, if you are looking to participate in a solo 401k plan down the road, it may best to not convert any or all of it to a Roth IRA because Roth IRAs cannot be transferred to a solo 401k plan; however solo 401k plans can be converted to a Roth Solo 401k.
Lastly the benefit of converting pre-tax funds to Roth funds is that you don't have to pay any taxes on the earnings which can be of tremendous benefit especially if the retirment account grows substantially.
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.
WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines. This question was posted by a WalletHub user. Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.
Ad Disclosure: Certain offers that appear on this site originate from paying advertisers, and this will be noted on an offer’s details page using the designation "Sponsored", where applicable. Advertising may impact how and where products appear on this site (including, for example, the order in which they appear). At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products.