top of page

Roth IRA Conversions Are Surging. Here’s Why This Savings Strategy Is So Popular Right Now

When the coronavirus sent stocks tumbling in March, it was a perfect time to convert a traditional retirement account into a Roth. But if you didn’t act then, you didn’t miss your chance, experts say.

Roths differ from traditional retirement accounts in how they’re taxed. A traditional 401(k) or IRA allows investors to make tax-free contributions, deferring the taxes until the money is withdrawn. Roth IRAs are the opposite in that investors pay income taxes on the money as it goes in, not when it comes out. The benefits of Roth IRAs include that you can make early withdrawals from contributions without a penalty.

Conversions are having quite a moment. Fidelity Investments saw a 76% increase in the number of Roth IRA conversions in the first quarter of 2020 versus the first quarter of 2019, according to Melissa Ridolfi, vice president of Retirement and College Leadership at Fidelity Investments. The momentum appears to have continued into the second quarter: in the first four months of April Fidelity has seen a 67% increase in the number of Roth conversions compared to the first four months of last year, Ridolfi adds.


237 views0 comments


bottom of page