My Legacy Estate Planner

Areas of Legacy Planning

Insightful Information

IRA Conversion Planning

Roth-vs-traditional-IRA.jpg

It may be hard to get excited about paying taxes now, as you would if you made the conversion, versus letting the assets sit in your traditional IRA and paying taxes later. Traditionally, the calculus about whether to convert from a traditional IRA to a Roth required you to project whether your income would be higher or lower in retirement than it is now, a question that's very difficult to answer if you have more than a few years until retirement.

However, I think the odds are excellent that tax rates across the board are currently low relative to where they could be in the future. If you share that view, you'll want to take advantage of every means you can to pay taxes now rather than waiting until later.

For that reason, I strongly prefer converting IRA to a Roth IRA. The Roth IRA also gives you more flexibility than you'll have with a traditional IRA. Notably, you won't be required to take mandatory distributions from a Roth at age 70 1/2, as is the case with traditional IRA assets. That's a huge boon if you don't expect to need your IRA assets during retirement; you can allow those investments to grow and pass on a greater amount to your heirs.

The issue is how do you convert and pay the least amount in taxes?  This is where our firm comes in.  We specialize in helping you understand the proper way of converting.  We implement a strategy knows as “tax bracket” converting. This methodology allows you to convert on a yearly basis and helps by minimizing the tax effects of converting. 

Please reach out to us for a complimentary consultation.