A survey by USAA found that boomers are forgoing tax-free retirement income by keeping traditional IRAs instead of converting them to Roth IRAs.
In 2010, the household limit of $100,000 in modified adjusted gross income is scheduled to be lifted, and boomers who convert their IRAs can pay the tax bill over a two-year period. However, 73 percent of boomers say they have no plans to do this. Furthermore, among higher-income households, who stand to gain more from the change in income limits, conversions were no more prevalent. In fact, 57 percent are not aware that income limits are scheduled to be cut, and 62 percent don’t know the converted funds are subject to tax.