What are the tax implications when you convert a regular IRA to a Roth IRA?
Converting from a regular IRA to a Roth IRA is actually a very beneficial process in the long run. Sometimes, if you have an annual income that exceeds the limit, then it isn't possible for you to switch to a Roth IRA because that would be considered taking advantage of the system. A Roth IRA is a retirement plan that allows people approaching retirement to pay their taxes without any tax breaks now, but as soon as they retire they are exempt from all income taxes throughout their retirement. Mostly middle class people choose this as it is a way they can save as much as they can and not have to pay too much in taxes during their retirement. A Traditional IRA is where the taxpayer will receive significant tax breaks today, but will be forced to pay income taxes during retirement. Sometimes these plans even themselves out in the long run, but depending on the person one or the other works better. Wealthy people have to choose this path because they will already save enough money while they're working that they need to be taxed during their retirement as they will have so much money saved up that they don't even need all of it.