Tax rules could make IRA conversions attractive for retirement living investors

Individual retirement accounts can help make retirement living affordable by enabling workers to invest money as they age, but tax regulations can make it difficult for some to understand what the best times to deposit and withdraw are.


Financial services firm USAA says that the Internal Revenue Service has updated laws surrounding Roth IRAs, meaning that the tax hit of converting funds from investment instruments to retirement income could be less expensive than maintaining traditional IRA accounts.


In spite of the potential break on funds, a survey conducted by the company found that more than half of Americans with investments for retirement living expenses didn't know about the change in the tax code, and less than 1 in 10 were planning on making the conversion.


"While a Roth IRA conversion may not make sense for everyone, it's important to understand the options available and the implications of taking, or not taking, action," said Terri Kallsen, USAA senior vice president for wealth management.

The change "provides a rare opportunity to potentially increase your income in retirement by hundreds, and even thousands, of dollars each month by eliminating taxes through a Roth IRA," she added.


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