The tax law allows you to convert a traditional individual retirement arrangement (IRA) to a Roth IRA. A Roth IRA can provide you with a potentially tax-free source of retirement income. That's not the case with your traditional IRA, since withdrawals must be included in your taxable income (except to the extent of any contributions that weren't tax deductible).

Although converting involves an up-front tax cost, it still can be a good tax strategy for some people. Here are a few details to help you decide whether a Roth IRA conversion is a strategy you should consider.

Roth IRA basics
Contributions to a Roth IRA are made with after-tax money. Generally, once you've held a Roth IRA for five tax years and you're over the age of 59½ (and in some other circumstances), all Roth IRA withdrawals — including investment earnings — are tax free. And unlike a traditional IRA that has annual minimum distribution requirements once you reach 70½, you don't have to withdraw money from your Roth IRA unless you want to.

If you don't need the money in your Roth IRA, you can keep it invested in your account on an income-tax-free basis for as long as you like. Eventually, your heirs could benefit.

Taxes on the conversion 
You will, though, owe income taxes when you convert a traditional IRA to a Roth IRA. The taxable conversion amount is included in your taxable income in the year of conversion.

So, should you convert? 

A Roth conversion might work for you if:

• You're younger.
• Your traditional IRA is small or you made nondeductible contributions to your traditional IRA.
• You have enough money outside your IRA to pay the tax on the conversion.
• You expect your tax bracket to be higher in retirement.

Your financial and tax professionals can help you determine if converting a traditional IRA to a Roth IRA is right for your situation.

FINRA Reference #FR2012-1030-0152/E 02/04/13

Disability is one of those topics people don't want to talk — or even think — about. However, millions of Americans are unprepared for the financial devastation that could result from a disability.

Alarming numbers 
Most people think the odds of becoming disabled are low. However, statistics* indicate otherwise: Over 36 million Americans are classified as disabled (about 12% of the total population). And just over one in four of today's 20-year-olds will become disabled before they retire.

Here's another alarming fact: The average length of a long-term disability absence is just shy of three years (32.1 months). Without an income source, there aren't many people who could cover their expenses for that long. Disability income insurance provides an important safety net in case a disability strikes. You can help your employees secure this valuable insurance protection by offering disability income insurance as a voluntary benefit that employees can choose and pay for themselves through payroll deduction.

Filling a need 
Cost is one reason your employees may not purchase disability income insurance on their own. You can provide group disability income insurance and/or offer individual policies so your employees can purchase the coverage they need (conveniently by payroll deduction) potentially for less than they would otherwise pay.

Lack of knowledge is another reason employees may shy away from disability income insurance. You can help overcome the information barrier by providing education about disability income insurance — and all your benefits. The more your employees know about the benefits you provide, the more they'll participate and the more likely they are to stay with your company.

Benefits for all 
Voluntary benefits are a cost-effective way of providing employees with an expanded menu of benefits. In today's competitive market, you need a solid benefits package to attract and retain valued employees.

Voluntary disability income insurance coverage is flexible and can be designed to fit with your existing employee benefits package. There are different levels of income replacement and different benefit and elimination periods. Your financial professional will work with you to come up with the right plan for you and your employees.

* Council for Disability Awareness, December 2011

FINRA Reference #FR2012-1030-0141/E 02/04/13