A really smart strategy for some taxpayers is to convert part of their regular IRA into a Roth IRA. Who should do this? If your income has dropped significantly in 2020, this might be the right move for you. You would have to recognize taxable income for the amount of the conversion but the advantage will come later when you retire and will have a pool of funds you can draw down when you want with no tax implications. There are no required minimum distributions for your Roth. Your money grows tax free. All of your withdrawals after a five year holding period and age 59 and 1/2 are tax free. You will leave a tax free inheritance to your family. You will also want to consider other issues such as using nonretirement assets to pay the taxes, taxable Social Security benefits, Medicare premiums, and the level of income for the 0% rate on capital gains ($80,000 on a joint return and $40,000 for a single return).
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