2008 was not a good year for the market. Typically it is colder during the winter than in the summer. Ok - now that I'm done stating the obvious, what can we do about it? (Buy a coat?...No, not about that; about the market!)

2009 was a year of rebounding that saw the Dow Jones Industrial average climb back over 10,000 after dipping below 6,500 in early March. However, many people are still looking at a statement that is considerably lower than where it was two years ago today.

Converting your IRA to a ROTH could be a way to make the best of these trying times. Converting to a ROTH IRA means you will be able to take tax-free withdrawals during retirement. The catch is that the amount in your traditional IRA at the time of conversion must be added to your taxable income for that year. Now may be a good time to consider this. We would all rather have $30,000 in our IRA than $20,000, but at the same time we would rather be taxed on $20,000 than on $30,000. That's the idea here. Another reason to consider this is the probability of taxes going up. The government has been spending money like it's not theirs (because it's not). Unfortunately this means tax rates are likely to go up in the future. Getting done with the 'paying of them' now might not be such a bad idea.

Converting may not be right for everyone, but your financial advisor can help you make that assessment. Considering the losses in retirement portfolios and the likelihood of higher taxes, converting to a ROTH IRA now may save you some money in the long run.

Steve Hicks

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).