Survey Finds Many Investors Ambivalent to New Roth IRA Conversion Opportunity
Too many uncertainties about the future, tax rates and government
spending leave investors undecided
OMAHA, Neb., Dec 09, 2009 (BUSINESS WIRE) -- There is no mad dash to convert to a Roth IRA when the rules change in January, making those with income over $100,000 newly eligible for such a conversion, according to a panel of over 1,000 TD AMERITRADE Holding Corporation's (NASDAQ: AMTD) retail investor clients.
Of those surveyed who have a retirement savings account that could be converted to a Roth IRA, 44 percent said they are still undecided on the matter. Yet, 85 percent of this group is at least 10 years away from retirement, and 47 percent expect their income to be over $100,000 this year, making them what would appear to be the ideal candidates for converting to a Roth IRA. So, why would they back away from a potential opportunity for long-term tax savings?
The top reason for their indecisiveness: they simply want to know more about Roth IRA conversions before making a decision (45 percent).
"We view this opportunity as a catalyst for educating our clients about the importance of investing for their future and monitoring their retirement readiness, said Diane Young, director, retirement and goal planning, TD AMERITRADE. "Our concern is not whether they convert now or later, or not at all, but to empower them to make an educated decision."
Deciding whether or not to convert to a Roth would be much simpler if it was just about basic math, but the reality is that there are many indefinite variables - like future tax rates and the state of the economy - to think about. Eighty-six percent of survey respondents think it is at least somewhat likely that their income tax rate could be higher when they reach retirement age. Additionally, 36 percent believe it is at least somewhat likely that the government could take steps to reduce the national debt by changing the tax-deferred status of retirement accounts such as 401(k) plans and IRA accounts.
Many respondents (30 percent) indicated that they want to speak to a professional before making a decision, and of them, 76 percent want to talk to their tax advisor first.
"At the end of the day, that's what this is about - taxes now versus taxes later. Our focus is to provide them with the information, tools and resources they need so that when they do go to their tax advisor, they go equipped with knowledge about the rules around IRAs, and how this planning strategy applies to their own personal situation," continued Young.
If an investor is considering a Roth conversion, they'll want to get organized. TD AMERITRADE suggests using the following checklist to help investors collect the information they'll need:
- Collect your current IRA statements.
- Gather your most current tax return.
- Run a Roth IRA Conversion analysis. Roth conversion calculators are widely available online, and on TD AMERITRADE's online Retirement & Planning site for clients.
- Discuss the conversion costs and benefits with your CPA/Tax preparer.
- Decide whether a full, partial or no conversion is the best option.
This change goes into effect January 1, 2010, so if you are considering a Roth conversion, visit www.tdameritrade.com.
Remember, converting to a Roth IRA may not be right for everyone, however it's still important to explore other investment decisions, such as combining assets to more easily manage finances. Using aspects of their current financial profile - taxes, planned financial events, yearly income, projected Social Security, IRAs and other investments - TD AMERITRADE's WealthRulerTM tool, recently named Best Retirement Tool by Kiplinger's,(1) can help investors create a customized retirement outlook.
For additional findings from this survey, please visit the TD AMERITRADE Newsroom.
For more information on Roth IRA conversions, please visit TD AMERITRADE's Retirement & Planning site.
TD AMERITRADE does not provide tax advice. We suggest you consult with a tax-planning professional with regard to your personal circumstances.
AMTD-G
Survey Methodology
This survey was conducted online within
the United States by InsightExpress on behalf of TD AMERITRADE between
November 18 and November 24, 2009 among 1015 current TD AMERITRADE
clients (aged 18 and over). Respondents were selected from among those
who have agreed to participate in InsightExpress surveys. The margin of
error in this survey is ±3.1%. This means that in 19 cases out of 20,
survey results based on 1,015 respondents will differ by no more than
3.1 percentage points in either direction from what would have been
obtained by seeking the opinions of all eligible clients of TD
AMERITRADE. The views expressed by respondents in these surveys are not
the views of TD AMERITRADE, or its subsidiaries, and should not be
considered investment guidance or any kind. InsightExpress and TD
AMERITRADE are separate, unaffiliated companies and are not responsible
for each other's products and services.
About InsightExpress
InsightExpress is a leading provider of
high-quality, digital marketing research and plays a preeminent role in
the measurement of advertising effectiveness across online, mobile and
other media. Through its patented technologies, proprietary solutions,
world-class expertise and time-tested research principles,
InsightExpress transforms the way advertisers, agencies, publishers and
researchers optimize their marketing activities. InsightExpress is
headquartered in Stamford, CT, with offices in San Francisco, New York,
and Los Angeles.
About TD AMERITRADE Holding Corporation
TD AMERITRADE
Holding Corporation, through its brokerage subsidiaries,(2)
combines innovative trading technology, easy-to-use and understand
investment tools and services, investor education and a client-centric,
multi-channel sales and service model to create a market-leading
financial services experience. Now home to the award-winning thinkorswim
brokerage and dynamic trading platform(3) and the Investools
investor education program, TD AMERITRADE provides millions of retail
investors, traders and independent registered investment advisors (RIAs)
with the tools, service and support they need to help build confidence
in today's rapidly-changing market environment. The Company's common
stock trades under the ticker symbol AMTD. For more information, please
visit www.amtd.com.
(1) Kiplinger's Personal Finance magazine, December 2009, WealthRulerTM named to 2009 Best List: Retirement Resources.
(2) TD AMERITRADE, Inc., member FINRA (www.FINRA.org) /SIPC (www.SIPC.org), TD AMERITRADE Clearing, Inc., member FINRA/SIPC, and thinkorswim, Inc., member FINRA/SIPC/NFA (www.nfa.futures.org).
(3) thinkorswim was rated #1 overall online broker, "best for frequent traders," and "best for options traders" in Barron's ranking of online brokers, 3/16/2009. thinkorswim was evaluated versus others in eight total categories, including trade experience/execution, trading technology, usability, range of offerings, research amenities, portfolio analysis & reporting, customer service & access and costs. thinkorswim topped the list in 2009 with the highest weighted-average score. Barron's is a registered trademark of Dow Jones & Company ©2009.
SOURCE: TD AMERITRADE Holding Corporation
TD AMERITRADE Holding Corporation
For Media:
Christina Goethe, 201-369-8541
Communications and Public Affairs
christina.goethe@tdameritrade.com
or
For Investors:
Jeff Goeser, 402-597-8464
Investor Relations
jeffrey.goeser@tdameritrade.com
Copyright Business Wire 2009