Roth IRAs Are Great for Almost Everyone

Also, investors 59 and older should only convert if they're certain (or at least highly confident) they won't need the money in their lifetime. The Roth must be open for at least five years before investors can withdraw any gains tax-free; but even if you'll need the money in 10 years, you're probably better off allowing the money to continue to grow tax-deferred until you start making smaller withdrawals and paying income tax on each distribution.

Investors that have already begun their mandatory distributions but still want to convert can do so, but if you haven't yet withdrawn your money for 2002, leave at least that amount in your traditional IRA and convert the rest, Scharin advises. You'll still need to take your mandatory distribution for 2002, even if you also convert in 2002.

And one more caveat no matter what your age -- under no circumstances should you convert a traditional IRA into a Roth if you don't have outside funds available to pay the tax. Dipping into your Roth IRA to pay the tax on your conversion to a Roth IRA just doesn't make sense.

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