USAA: Boomers Consider Roth IRA Conversions Too Taxing

Knowledge may be power, but being educated about the 2010 changes for Roth IRA conversions isn't spurring many to take control of their finances to create tax-free income in retirement, according financial services company USAA.

In a release the Company said the survey highlights changes in investor awareness of the Roth IRA conversion provisions available this year as compared to USAA's 2009 survey on the topic. Seventy-two percent of all respondents who own an IRA are not planning to convert some or all of their Traditional IRA to a Roth IRA this year, and 18 percent are unsure. This closely aligns with the 2009 findings where 73 percent of all respondents who own an IRA did not plan to convert in 2010, and 19 percent were unsure.

"It's a positive sign that some people are consulting financial advisors to determine if a Roth IRA conversion makes sense, but we are surprised by how many investors are gambling on future income-tax rates to make this decision," said Ken Kilday, a wealth manager with USAA Wealth Management. "The combination of today's historically low income-tax rates and the flexibility to pay taxes on the converted funds in 2010 - or to split it between 2011 and 2012 - should encourage more investors to work with a financial expert to explore whether making a full or partial conversion this year will help them meet their long-term financial goals. Converting to a Roth IRA is like paying off the mortgage on your house because you pay the tax bill - or the mortgage - today instead of later on down the road. Depending on your financial goals, paying that'mortgage' now and ensuring that all future account growth will be tax free could reap big benefits for you and your heirs."

The 2010 report presents the findings of four telephone surveys conducted by Opinion Research.

USAA provides insurance, banking, investment and retirement products and services.