Would it be wise to take $500K out of a traditional IRA and pay the taxes and roll the proceeds into a ROTH IRA.

The contents of this answer is for educational purposes only and does not constitute an attorney-client relationship.

This is an area I have extensive experience in and the answer of which will depend on a lot of factors, most of them tax and investment related. You did not mention if you are married (which could cause issues). And you did not mention what estate plan you have...especially since one of your beneficiaries is still a minor.

YOUR ROTH QUESTION
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Starting next year In 2010 (unless changed by Congressional act), a ROTH conversion can be performed on a traditional IRA, whereby the taxes due would be payable over two years (2011 and 2012). There are restrictions and other obstacles you need to know before going down that path. Also realize that there are some benefits to not ROTH'ing all of your traditional IRA. And there are some age-restrictions too.

YOUR STRETCH IRA QUESTION
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Regardless of the ROTH or Traditional Status, the type of investment should also be of concern to you, as well as your plan of using (or not using) the IRA for retirement income or emergency funds. There are only a few select investments designed to work with stretch IRA's to accomplish your goal of giving your children the option to take MRD's based on each's own life expectancy.

Good Luck!

Robert

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