Advisors: Many Skeptical about Roth Conversions

Congress recently encouraged traditional IRA holders to convert to Roth IRAs and pay income taxes on the assets converted now, rather than waiting to pay income taxes on the distributions later, by eliminating a rule that once kept taxpayers earning more than $100,000 per year from converting their IRAs.

The typical advisor client earns more than $100,000 per year, but few of those high-income clients are showing much interest in Roth conversions, advisors told Advisors Trusted Advisor.

One reason given is that many clients dislike the idea of paying conversion taxes. Another reason is that many clients and advisors fear that the government will somehow change Roth account rules in a way that will turn “converters” into losers.