Roth IRA Conversions

Charles Schwab offers a lot of support and educational resources for beginning traders. Some of the products we feature are from partners. Overall, most employers or financial institutions make it easy to convert to a Roth.

How do Roth IRAs differ from traditional IRAs?

In addition, the fees you pay for maintaining the account and purchasing those investments may vary widely. There, you can manage your account yourself, picking and choosing investments based on your goals and risk tolerance. Most brokers will offer access to individual stocks, bonds — some of which do pay a fixed interest rate — and mutual funds, including index funds and exchange-traded funds.

These computer-aided investment services will manage your account for you, building a portfolio that aligns with your goals and adjusting it as needed. Most robo-advisors use index funds or ETFs. At a broker, you might pay transaction fees to buy and sell investments, and there are annual fees — called expense ratios — for the mutual funds you choose.

NerdWallet adheres to strict standards of editorial integrity to help you make decisions with confidence. Some of the products we feature are from partners. We adhere to strict standards of editorial integrity. Some of the products we feature are from our partners.

Promotion Up to 1 year Up to 1 year of free management with a qualifying deposit. Promotion commission-free trades with qualifying deposit. See Our Retirement Calculator. Roth or Traditional IRA: What you need to know about and IRA contribution limits and deadlines. Edward Jones Hide Menu. What are the benefits? You may pay lower taxes if your current tax rate is lower than your expected tax rate in retirement.

Diversifying your retirement assets by tax treatment may give you greater flexibility to manage your taxable income in retirement, so you don't have to worry as much about future income tax rates. No minimum distributions RMDs are required while the original account holder is alive, allowing your assets to grow tax deferred over a longer period.

You may be able to create a tax-free legacy for your heirs. Think about taxes If you do decide to convert to a Roth , the taxes you'll owe for the conversion generally will be based on the value of the investments in your IRA at the time.

What else to consider Keep your end goal in mind when deciding to convert to a Roth. Will you be able to afford the taxes due? What is your tax rate now, and what will it be in the future?