And the Roth IRA is no exception. Congress smiles in the spotlight when it passes a tax break. The IRS, laboring in the fog, has to produce an enforceable rule. For this, the Congress will ritually bash the IRS, although Congress was the prime mover of the mess. I've gotten more mail on this issue than any other investment matter I can remember.
Conversion sounds simple on the surface, but the questions surrounding it are incredibly complex.
The IRS recently closed a loophole that some converters were using to enhance their tax break. Roth conversions are terrific for people who'd like to leave part or all of their IRA money to heirs. You can leave the Roth to heirs entirely income-tax free. By paying the tax with non-IRA money, you leave the maximum in the Roth to accumulate tax free. Taxophobes resist the cost.