Roth Conversion: Fidelity Shares a Tool

Developed by SunGard, the online Roth IRA conversion calculator can be used by broker/dealer clients of National Financial.

With the income limits and filing status restrictions being removed starting January 1, 2010, for investors who want to convert to a Roth IRA, Fidelity has announced the availability of an online Roth IRA conversion calculator for broker/dealer clients of National Financial.

The calculator, which was developed by SunGard, was designed to address the following:

* Help advisors' clients decide whether they are likely to benefit from a Roth IRA conversion

* Analyze the potential tax and growth impact of converting -- full or partial amounts -- to a Roth IRA versus leaving in a traditional IRA or other account type

* Calculate lump sum, after-tax value at the initial point of distribution, as well as annual after-tax income generated throughout the distribution period

* Illustrate results, both at the initial point of distribution, as well as throughout the distribution period.

Lizanne Campbell, senior vice president with National Financial, says the calculator can open several conversations with prospects and clients. "Maybe there's a 401(k) that the client has with a former employer that's eligible for rollover," she says. "This is a great opportunity for the broker to find out about those hidden assets and discuss whether it makes sense to roll over those assets into a Roth."

Another potential conversation: Does the clients plan to use the assets for retirement income or do they wish to leave these assets for heirs as part of their estates?

If the client can convert, then the heirs don't pay any income taxes when they start distributing from the IRA at the client's death.

"Clearly Roth 2010 is opening this up to those high net worth clients who don't necessarily need at least part of these assets to generate income in retirement," says Campbell. "They are really looking for a way to soften the tax burden (on their heirs)."

Reprints Discuss this story
We welcome your thoughts. Please allow time for your contribution to be approved and posted. Thank you.

Most Recent Videos

Video Library ››