Many Turn to Advisers for Roth Conversion Help

A Charles Schwab survey found most high-income Americans want financial advisers to help them determine if a Roth conversion is right for them.

On January 1, when the income restriction is lifted, many investors will have the opportunity to convert to a Roth IRA. Currently, only people with modified adjusted gross incomes of $100,000 or less are eligible to convert.

Despite the pending changes, most Americans in the previously excluded income bracket are not planning to convert to a Roth, according to the Charles Schwab survey. Nearly three-fourths (72%) of Americans making more than $100,000 annually are not planning to convert.

More than half (61%) of respondents are not even aware of the changes taking place. Of those that are aware, there is still uncertainty: More than one quarter (26%) find it more confusing than health care reform, and more than a third (34%) are unsure of the general benefits of a Roth IRA versus a traditional IRA.

However, most of the surveyed high-income Americans (71%) said they would like to consult with a financial adviser about the Roth IRA conversion rule changes. Forty-nine percent would like to consult a tax planner.

Slightly less than a third (32%) of respondents already have a Roth IRA as part of their retirement savings strategy. Of those respondents, 50% cite the benefits of tax-free investment growth as the primary motivation to have a Roth IRA.

Charles Schwab surveyed 400 Americans making $100,000 or more.