Question

In general, which of the following factors make the idea of converting a traditional IRA to a Roth IRA seem more attractive?
a. A high current tax rate and a low expected tax rate during the account owner's retirement, b. The expectation of a low rate of return o. the investments held in the account after the conversion, c. A low current tax rate and a high expected tax rate during the account owner's retirement Years, d. A short time until the account owner reaches retirement age.

Answer 1

Correct answer is: c. A low current tax rate and a high expected tax rate during account owner's retirement years

The tax rate levied to an individual in it's early age is lower when his earnings are also lower in comparison to his retirement years i.e higher tax rate on higher earnings. To pay less tax on higher earning in later retirement age it is beneficial to convert a traditional IRA to a Roth IRA.