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Is it advantageous to convert a traditional IRA to a Roth IRA during a 50 percent market downturn?

If I have $20,000 in a Traditional IRA ($15,000 in contributions, $5,000 in gains), and the market plunges 50 percent, would I pay my income tax rate on $17,250 ($15K contributions + $2.5K gains) or $10,000 (current market value) if I choose to do a Roth conversion at that time? Is it advantageous to convert a Traditional IRA to a Roth IRA during a 50 percent market downturn?

IRAs, Taxes, Income Tax
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June 2018

Technically speaking, your answer is yes.  It is advantageous given that you pay taxes on the converted amount, period.  If the value drops, then you have less money to convert and less taxes to pay. I would look at the matter a little differently.  I would look at preserving and protecting your portfolio from market downturns through proper asset allocation and diversification.  You certainly can't diversify away all risk.  But I would place my emphasis on being a smart investor first. I would address the conversion issue second by converting only the amount you would be comfortable paying taxes on.  You can convert all or a portion of the IRA.  You don't have to convert the whole account all in the same year.  Convert what you can afford and leave the rest to be converted in later years. It's never wise to let taxes take precedence over being a smart, successful investor.  If you follow my advice, you'll end up with the most money for retirement when you get there. 

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