Agood idea eight years ago is pro- bably still a good idea today. That’s certainly the case with the Roth IRA which was covered in a November 1997 column, “What Congress Has Roth” by Mary Rowland. What President Bush has been pushing as Retirement Savings Accounts is really just an expansion of the Roth IRA. Some excerpts from that article are reprinted below.
“What’s your candidate for the most overlooked nugget in the Taxpayer Relief Act of 1997? Those in the know are pointing to the conversion feature of the Roth IRA….[The] point is extra decades–or even generations–of tax deferral and the opportunity to leave money to the next generation in a much more efficient way…the fact that withdrawals aren’t included as taxable income can benefit taxpayers who, for example, receive Social Security income….You need not take money out during your lifetime. It can continue to grow tax free…There’s no 10% penalty made on withdrawals before age 591/2 provided you withdraw the contributions you made, not the earnings…the conversion opportunity is the issue for 1998. Those who switch retirement savings from existing IRAs into a Roth will pay tax now on the current value of the money going into the new account, but avoid tax liability on later withdrawals. Conversion is an advantage for most taxpayers.”