|Copyright:||Copyright Business Wire 2010|
|Source:||Business Wire, Inc.|
One in four consumers remain undecided about converting their traditional IRAs to Roth accounts
The First Command Financial Behaviors Index® reveals that 23 percent of middle-class Americans who own a traditional IRA have yet to decide if they will convert their account to a Roth IRA, even though the opportunity to pay the resulting tax bill over a two-year period will end on
“While the 2010 conversion opportunity is a potentially lucrative move, the uncertain economic climate has made it a difficult decision for many investors,” said
Since the introduction of the Roth IRA in 1998, many investors have converted their traditional IRAs and paved the way for significant tax advantages in retirement. Unlike the traditional IRA, in which investors can reduce their tax liability now through pre-tax contributions and defer taxes on contributions and earnings until retirement, the Roth IRA enables investors to assume the tax liability today through after-tax contributions, then enjoy tax-free income at retirement.
Almost half of survey respondents say they are currently enrolled in a traditional IRA, making them candidates for a Roth conversion. Nine percent of consumers say they are currently enrolled in a Roth IRA, and one in five say they own both types of accounts. Just one in three people say they do not have an account that can be converted.
Still, many investors have decided against a conversion. Thirty-four percent of consumers say they will not convert their traditional IRAs, and the most often cited reason is they expect to be in a lower tax bracket in retirement.
“The frequency of the lower tax bracket response is virtually unchanged from our
For more information about Roth IRA conversions, visit www.firstcommand.com/rothnow/.
About the First Command Financial Behaviors Index®
Sentient Decision Science was commissioned by First Command to compile the Financial Behaviors Index®. Sentient is a full-service market research firm with special vertical expertise within the financial services industry. Sentient specializes in advanced research design and statistical analysis of behavioral and attitudinal data.
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