Table 3. Keeping Assets in a Non-Deductible IRA vs. Converting to a Roth IRA

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 Withdrawals in Retirement		Net Gain for Roth IRA in Total After-Tax Withdrawals
Current Age	Amount Transferred to New Roth IRA	Federal/State Inc Taxes Due	Deductible IRA	Roth IRA	Deductible IRA	Roth IRA	Net Gain for Roth IRA in Total After-Tax Withdrawals
45	$25,000	$4,313	$116,524	$116,524	$173,100	$239,585
Tax Savings Account**			16,520	N/A	29,187	N/A
Total Value			133,044	116,524	202,287	239,585	$37,298

55	$50,000	$8,625	$107,946	$107,946	$162,930	$221,948
Tax Savings Account**			16,881	N/A	30,166	N/A
Total Value			124,827	107,946	193,096	221,948	$28,852
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.*