With income tax rates scheduled to rise in 2013, you should consider converting traditional IRAs to Roth IRAs in 2012.

Also, individuals over the age of 59½ who have assets in qualified retirement plans—401(k)s or profit-sharing plans—should consider making in-service distributions, if their plans allow. These distributions can be rolled into a traditional IRA, which then can be converted to a Roth IRA.

Roth IRAS are desirable because they offer:

• Tax-free withdrawals—Although you have to pay income tax on the assets’ current fair market value when you make the conversion from a traditional IRA to a Roth IRA, neither you nor your heirs inheriting the account will need to pay taxes on any distributions received from the Roth IRA
• Tax-free growth—Assets in the Roth IRA can grow tax-free, not only during your lifetime, but also during your heirs’ lifetimes
• No required minimum distributions (RMDs)—Traditional IRAs require you to receive distributions when you reach 70½ years old. No withdrawals are necessary for the original owner of a Roth IRA. You can pass this account on to your heirs, intact 

There may be significant benefits to allowing the full value of your assets in your Roth IRA to compound tax-free over time. For example: If a 50-year-old woman converts her traditional IRA to a Roth IRA in 2012, she could see her wealth at age 90 be 40% more than if she had not converted her IRA.

There also can be a tremendous benefit to your heirs. Individuals who inherit a Roth IRA receive assets that could be undiminished by RMDs. Estate tax may be due on a transferred Roth IRA as it is on a traditional IRA, but with a Roth, no income tax is due on the RMDs heirs receive. Income-tax-free distributions may offer a potential benefit. Our analysis shows that inheriting a Roth IRA may increase the value of IRA distributions over the beneficiary’s lifetime by more than 70%.

However, deciding whether to convert requires careful analysis. J.P. Morgan can work closely with you and your advisors to help you evaluate what is appropriate for your particular situation.

We invite you to contact us and a J.P. Morgan representative will be in touch with you.