December 2010 archive

I’m pretty sure that I resolved several years ago to stop making New Year’s resolutions. My track record at sticking to resolutions was abysmal.

Actually, I’ve done pretty well at hitting savings goals over the years, because I don’t rely on willpower. I use automatic savings—through my 401(k) at work and through preset automatic transfers from checking into investment accounts. These mechanisms are artificial willpower—a painless way to stiffen my backbone.

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Year-end is fast approaching, and based on web traffic it seems like the question of converting traditional IRA savings to Roth savings looms large. Congress has added to the buzz by allowing the conversion of certain pre-tax 401(k) money into Roth money (though few plans will offer this option in 2010).

Before you jump on the conversion bandwagon, I want to raise a critical question: What if tax rates don’t go up?

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