Q: Even though I am in a position to do so, I cannot convince myself to convert my IRA (or part of it) of several hundred thousand dollars, to a Roth IRA. If I convert $50,000 as an example, my tax bill is over $12,000 higher for the year. That is the issue that keeps me from making this conversion. Can you offer me arguments that would allay my concerns about such a tax bite? Are there situations where people in my position would be better off forgetting about a Roth conversion? Thanks.

Bob

A: I'm not going to try to convince you to make a Roth IRA conversion. Like most personal finance maneuvers, the decision involves weighing a series of trade-offs. Even if conversion makes sense on average that doesn't really tell you anything about the merits of the strategy for your particular circumstances. It has to be the right financial move for you. What I want to offer are some aspects of conversion to consider.

First of all, the Roth IRA is a terrific retirement savings vehicle. The main reason is that while a Roth is funded with after-tax contributions you won't pay taxes on your accumulated gains when you withdraw the money during retirement. The Roth has a number of other attractive features, including no required minimum distribution starting at age 70 ½, a requirement with traditional IRAs and 401(k)s. A quick definition: Conversion is taking money from a tax-sheltered traditional IRA funded with pretax dollars or an employer-sponsored savings plan like a 401(k) and transferring the money into a Roth. You pay the accumulated taxes owed on the tax-sheltered savings.

You'll want to run the numbers before doing anything. Analyzenow.com has a good program that allows for a detailed analysis of the trade-offs. So does the comprehensive online financial planner ESPlanner.com.

Here are some things to think about. A reasonable rule of thumb — an initial cut, if you will — is that conversion is worth considering if you have additional savings to tap to pay the tax bill. It doesn't make sense most of the time if you have to use your tax deferred savings to meet the government's levy. Along these lines, you should also decide that paying the accumulated tax bill upfront is the best use of your savings compared with, say, maintaining a flush emergency savings account and paying down debts. The more financial resources you have outside retirement savings the more conversion is a sensible financial strategy.

Time is another consideration. The tax-free power embedded in Roth-sheltered accounts comes into play the longer the money is in it and, therefore, the lure of conversion is stronger. Some other questions to consider are: What is your best guesstimate of your income and tax bracket in retirement? What are the odds that you'll pay higher taxes in the future (a factor in favor of conversion) or the likelihood that your tax rate will go down (a reason for sticking with the status quo)?

Again, run the numbers and put the conversion decision into the broader context of your overall household finances. That's how I would answer the question of whether a Roth conversion is worth the effort and the upfront tax bill for you.

Chris Farrell is economics editor for "Marketplace Money." His e-mail is cfarrell@mpr.org.