How is a Roth IRA different from a traditional IRA?
A traditional IRA is characterized by deductible contributions that grow tax deferred until distribu-tion. When distributions are made from a traditional IRA they are considered ordinary income. Contributions to a Roth IRA are not deductible. Roth IRA contributions grow tax free because they are not taxed within the Roth IRA or at the time of distribution (as long as the minimum hold-ing period, usually five years from time of contribution, and other requirements, such as age, are met). Distributions from Roth IRA earnings that have not satisfied the IRS requirements are sub-ject to income tax and in certain situations an additional 10% tax penalty may apply. What are the disadvantages and benefits of the Roth conversion? While there are a lot of benefits to convert to a Roth IRA, there are a few disadvantages you should consider before making a decision. First, if you are under 59 ½ you must use cash (outside of your IRA) to pay for your income tax liability. If you do not have the ca
