TO CONVERT OR NOT?

[Guest IZZYCPA]

Help! I am CPA whose client are calling about converting to Roth IRAs. My initial reaction to most was "No", unless they were in a low bracket or young. Having read a bunch of articles on ROTHIRA.COM, I am now no longer sure that is true. I have tried many of the calculators at the website, but I still am unsure. My question is: if I find in 1999 that a client would have been better served by converting, isn't it true that in the worst case, the client can still convert in 1999 or later (perhaps over a 4-year period) and the only thing they lose is the tax on the IRA growth in the meantime (i.e. the period over which they do convert instead of in 1998)? It seems to be less than a fatal mistake if the conversion is delayed. Could someone please address these issues? Thank you.

[BPickerCPA]

If the question is whether you have treated your clients properly if they would be better off converting to a Roth, and you told them not to, I will not answer that.

As to whether they can convert next year, "no harm no foul", the answer is a definite NO in many cases.

Many clients will not be able to convert next year due to the income limitations. Also, converting this year and spreading the income over four years is not the same as converting 1/4 of the account over four years.

Clients for whom converting is advantageous, are entitled to know that if they asked, and should do the conversion in '98 if eligible.