Roth IRAs can be extremely efficient retirement savings vehicles. They are funded on an after-tax basis, and as a long as certain requirements are met, distributions are free of tax and penalty.
Clients can fund their Roth IRA in one of two ways: via annual Roth contributions or by converting assets from a qualified plan or another type of IRA they already own. But whereas annual Roth contributions are subject to modified adjusted gross income (MAGI) limits, Roth conversions are not. It’s one of the reasons any of your clients could decide to convert assets to a Roth IRA.