Episode 66: Everything You Need To Know About Roth Conversions

Today’s Prep:

Have you heard about Roth conversions? Wonder if it’s the right thing for you? David talks through different scenarios related to Roth conversions to see if it’s something that could benefit you.

(Click the featured times below to jump forward in the episode)

Equipping Points:

What is a Roth conversion? Is it something you should consider as a part of your retirement plan? On this episode of Cover Your Assets KC, we’ll cover everything you want to know when it comes to Roth conversions.

To start, what’s a Roth IRA? A Roth account does not give you a tax break now, but in the future when you withdraw it (hopefully after age 59 and a half), you don’t pay any income tax. This creates a tax-free retirement account. So, a Roth conversion is taking some money out of your IRA and redepositing it into a Roth IRA to pay the taxes now, instead of later.

Is this something that could benefit you? David shares a few examples of clients where a Roth conversion was worthwhile as well as examples of clients who were better off skipping the Roth conversion.

When making a Roth conversion, you’ll want to avoid making mistakes and paying more taxes all at once. Working with a financial advisor to ensure you make the conversion the right way can make a significant difference. If you do it in a way that bumps you up into a higher tax bracket, you might otherwise pay thousands more than you have to. Even if a Roth conversion will benefit you, there is a right and wrong way to do it.

Finally, a Roth conversion isn’t for everyone. While it provides a lot of potential benefits, your situation may be better off either without doing a Roth conversion or waiting until another time.

Listen to the full episode to see if this is a strategy worth implementing or click on the timestamps below to hear David answer specific questions related to Roth conversions.

[1:38] – What is a Roth conversion?

[3:37] – What benefit does a Roth conversion provide?

[8:33] – What are common mistakes when it comes to Roth conversions?

[11:11] – What’s the right way to do a Roth conversion?

[13:47] – Who should not do a Roth conversion?

[17:02] – What does this process look like when working with David’s team?



More From David:

The host: David Dickens

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