From the May 2010 issue of Boomer Market Advisor • Subscribe!

May 1, 2010

Boomers shun Roth conversions

Despite being bombarded with ads and related information urging investors to consider Roth IRA conversions, baby boomers appear comfortable staying right where they are--on the fence. So writes Philip Moeller of U.S. News and World Report. Big mistake, he says, as conversion rules have never looked better (nor are they likely to look so good anytime soon).

"USAA, the large insurance and financial services company, surveyed boomers in July 2009 and February of this year. Awareness of the new conversion rules increased nearly 20 percentage points to 58 percent. But 90 percent of boomers said this year that they would either not do a conversion or are unsure about it. Little changed--92 percent provided similar responses in last year's poll.

"According to USAA, the top reasons people gave for not converting were that they expected lower tax rates when they retired (44 percent cited this); they were advised by a tax adviser or other financial professional not to convert (35 percent); and they could not afford the tax bill on the funds converted into a Roth (27 percent)."

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