AssetBuilder Inc. Registered Investment Advisor - Simple Investing. Smart Future.

Dear Scott,

I read in your new book "Spend 'til the End" p. 159 that many middle and high income earners will be able to convert regular IRAs to Roths in 2010. Do you think that many will convert? If so, would you guess that a good portion of the investments in those IRAs would have to be liquidated to pay the taxes thereby causing a large sell-off in assests like stocks? I anticipate converting and selling off some of my stocks to pay the taxes.

Thanks, Bob74

Bob,

It makes more sense to use other assets (assets in non-IRA accounts) to pay the taxes for the conversion. Also, if tax rates are increased before then, the benefit of making the change will be reduced. I think lots of people will think about doing this but relatively few will actually do it. So I don't think it will have much market impact.

The real monster that could affect future stock values is higher tax rates. That's why I'm not a fan of Senator Obama's tax plans.

Scott