|Table 3. Keeping Assets in a Non-Deductible IRA vs. Converting to a Roth IRA|
|Current Age||Amount Transferred to New Roth IRA||Federal/State Inc Taxes Due||Pre-Tax Value at Retirement||Total After-Tax
|Net Gain for Roth IRA in Total After-Tax Withdrawals|
|Deductible IRA||Roth IRA||Deductible IRA||Roth IRA|
|Tax Savings Account**||16,520||N/A||29,187||N/A|
|Tax Savings Account**||16,881||N/A||30,166||N/A|
|The assumptions are the same as for Table 1, but since this is a non-deductible IRA, it assumes all IRA contributions were not deductible and, therefore, only earnings are subject to tax. The federal/state income taxes due for the non-deductible IRA assumed that the basis in the IRA at the time of conversion was $10,000 for the 45-year-old and $20,000 for the 55-year-old. It also assumes no taxes are paid from the non-deductible IRA, so the full amount in the IRA is converted to the Roth.
*The "tax savings" account assumes that the taxes that would have been paid in the IRA conversion are instead invested in a separate taxable account growing at the same rates noted above. The "tax savings" for the 45-year-old is $4,313 and $8,625 for the 55-year-old. The value of this separate account is added to the current non-deductible IRA to make a valid comparison with the Roth IRA, since we assumed that no money was taken out of the non-deductible IRA to pay taxes due as a result of converting to the Roth IRA.
Source: T. Rowe Price Associates, Inc.