With the downturn in the market these past long months there is increasing talk about the pros and cons of converting an existing diminished IRA account into a Roth IRA.  Both types of IRAs are designed to help you save for retirement while providing a tax advantage, but they do so in different ways. We thought it might help to understand the difference.  With a traditional IRA, you pay the tax due when you withdraw the funds, and with a Roth IRA, you pay the tax due on the funds you contribute so that the withdrawal amount later on is then tax-free.   This means that if you convert your traditional IRA, where you’ve been investing pre-tax dollars,  into a Roth IRA you will need to pay the full tax due during the year that you make the conversion, [this may be less then you think because  you have less money to withdraw due to the market downturn], but then that retirement money will be in a ROTH where you’ll invest those dollars to grow tax-free, and you can make withdrawals in the future on hopefully a greater amount, also tax-free.   Call us, we’re always here to help you navigate rough times.