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March 2010: How to Find a Financial Advisor or Financial Planner

Most people don't know where to turn to find a good financial advisor. Often, people will ask a friend or relative for a referral to an advisor. However, the advisor who is a good match for your friend might not be a good match for your specific financial needs. Now there is a free application at this link to Find a New York Financial Advisor. The first step is to pick the general services such as financial planning, which you are looking for help with. Then you can screen advisors by additional criteria like location, qualifications and fees.

The application will show you a list of only the financial advisors who match the criteria you searched for. Now you can click on each advisor and read a detailed profile about them, which describes who they are, their experience, their investment philosophy, any specialties and who their target clients are. This allows you to determine if this advisor's experience is a good fit for your financial needs. If so, you can contact one or more advisors to set up an interview to learn more.

November 28, 2009: 2010 Roth IRA Conversion

In 2010, there are no income limits for converting a regular IRA into a Roth IRA, which means that everyone should consider which alternative is best for them.

First, let's consider the difference between a regular and a Roth IRA. In a regular IRA, you take a tax deduction in the current year, meaning the money you put in is "pre-tax". However, you pay regular income tax on the money when it is withdrawn from the IRA. The advantage is that you pay less tax now and the money is growing tax-deferred. With a Roth IRA, the money you put in is regular after-tax money. However, it both grows and is withdrawn later tax-free. This is especially important if you think tax rates are going up due to massive government deficits and you want to pay taxes now, invest in the Roth and avoid the higher taxes later on the withdrawals.

Congress made rules that some people can convert a regular IRA to a Roth IRA by paying the income tax today on the formerly pre-tax money (and gains) which are being converted. By paying taxes upfront, this allows the individual the Roth IRA benefit of withdrawing the money tax-free later.

However, Congress excluded anyone earning over $100,000 from making this conversion, but this income limit goes away in 2010 and beyond, which means that anyone can potentially convert a regular IRA to a Roth IRA.

Should you convert a regular IRA to a Roth IRA?

Unfortunately, there is no absolute right or wrong answer. There are many Roth IRA calculators available on the Internet, but none of them can predict what future tax rates will be, or what a future Congress will do to change or even do away with IRAs. For this reason, many financial planners will tell investors to have portions of their money in accounts with different types of tax treatment. This means you save some of your retirement money in a regular taxable account, some in a tax-deferred account like a regular IRA, and some money that can be withdrawn tax-free like a Roth IRA. This gives you the freedom in retirement of withdrawing money first from the most tax-advantagous accounts first and leaving money in the other accounts until later.

Another consideration is how to pay for the taxes of converting a regular IRA to a Roth IRA, especially considering that many IRA's have tens or hundreds of thousands of dollars which will be subject to income taxes. The rules for 2010 state that you can spread the extra income from the conversion over 2 years, lessening the burden for 2010.

Everyone with a regular IRA should talk to a New York financial advisor or New York financial planner to talk about the pros and cons of a 2010 Roth IRA conversion.

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