Wednesday, March 10, 2010

Income Limits on Roths Removed, Investors Taking Advantage

More than one-third (or 40%) of eligible investors working with tax advisors are expected to complete a Roth IRA conversion by year end, according to a study released today by Fidelity Investments.

The motivation? The recent removal of income limits for Roth IRA conversions.

A Fidelity survey of nearly 500 tax advisors found advisors believe that 43% of their clients would benefit from a Roth IRA conversion, given two-thirds of advisors also think income taxes will generally rise in the future. Most ( or 88%) advisors also expect discussions with their clients about Roth IRA conversions will increase during the next six months.

Fidelity said the survey findings correspond with company figures that show a surge in investor
interest in the Roth IRA conversion guidance in January.

"As this is a complex decision, it’s encouraging that investors are engaging
financial services providers and tax advisors to develop an overall retirement plan and
discuss the potential benefits of a Roth IRA conversion,” Chris McDermott, senior
vice president, investor education, retirement and financial planning for Fidelity
Investments said in a statement. “Fidelity believes investors should consider a variety of tax strategies when saving for retirement, including a Roth IRA, which offers tax-free growth potential."

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