Why consider a Roth IRA in 2010? Roth IRA advantages include tax-free profits and no required distributions

If you're trying to decide whether converting to a Roth IRA in 2010 is the right decision for you, you should consider the benefits of a Roth account. Depending on your situation, a Roth IRA can offer benefits not found in other types of retirement accounts.

Roth IRA Advantages

• Qualified withdrawals are tax-free
• Investment profits compound tax-free
• No required withdrawals
• May be able to pass on earnings to beneficiaries tax-free

With the Roth IRA 2010 limits changing, your benefits are greater than ever!

Reducing Tax Exposure for Your Portfolio Makes Big Difference

The main benefits of the Roth IRA, such as tax-free investment profits and tax-free withdrawals, can have a dramatic affect on your wealth. For example, if you were to contribute $4,000 a year to a Roth IRA iin 2010 and assume an 8% compound interest rate of return for 30 years, your IRA would be worth $449,113 at the end of year 30.

If you made the same investment outside of a Roth IRA in a non-tax sheltered environment, assuming a 31% tax rate, it would only be worth $286,752 instead of $449,133.

That is 43% less, a difference of $162,381.

Disclaimer: Before converting an existing retirement account, be sure to talk with your tax professional to make sure you have a clear understanding of how the tax rules would affect you.