When is the right time to do a Roth IRA Conversion?
Do you just do it whenever you want, or should you have a plan?
Before we get into when should you perform a Roth IRA conversion we need to discuss exactly what a Roth IRA conversion is. That’s the first part of this video.
From there, we can look at the reasons for a Roth conversion.
First…you think taxes will be higher later so you would rather pay them now.
When planning around this theory you are trying to pay the least amount of taxes in your lifetime.
The key to this point is that you don’t have control over how much you withdraw.
The government tells you how much you have to take out and it’s 100% taxable.
One way to plan around this is to slowly but surely shift money from a traditional IRA to Roth IRA so that by the time you hit the age of 72 your traditional balance is a whole lot less than it is now.
When the government forces you to make a withdrawal it will be a whole lot less because the balance is down.
The key to this point: it’s not just the fact that you want to convert some money to get more Roth, you actually want your traditional balance to go down.
This means you need to Roth convert all of the growth and then so year after year to get the balance to go down.
The video above walks through all of this in more detail. Hopefully, it helps you understand more about your options.
The information provided is not intended as tax or legal advice. Figures shown are for illustrative purposes only furthermore, the information nor the illustrations provided may not be used to avoid any tax penalties. This content represents the general views of Christy Capital Management and should not be regarded as personalized investment advice Nothing herein is intended to be a recommendation. The opinions expressed are subject to change without notice. On March 1, 2022, Retirement Benefits Institute, Inc., and a portion of its contents merged with Christy Capital Management Inc. Brandon Christy, former President of Retirement Benefits Institute, is also the current President of Christy Capital Management, Inc, a registered investment adviser.
