In this video, CERTIFIED FINANCIAL PLANNER™️ Professional Colin Exelby discusses the most powerful way to build tax-free wealth. There used to be an income cap. But, that tax law was changed back in 2010 to allow anyone the opportunity to convert. But… that
huge advantage may be slipping away.
As a reminder, if you have Traditional IRA assets, you took a tax deduction at some point in the
past and you will owe taxes on those funds at some point in the future… and Congress is
counting on it, salivating at the chance to grab a large portion of those assets.
As we learned in Part 4 of the series, A Roth IRA allows for tax-free growth, tax-free
distributions and tax-free transfer of the assets to your heirs.
In part 5 we are talking about conversions. A conversion is where you elect to move assets
from your traditional IRA to your Roth IRA, pay taxes now at the historically low tax rates and
then never be taxed again.
Stick with me and I’ll explain:
Why Roth conversions are so important to the zero percent tax bracket in retirement and why the clock is ticking on this tremendous strategy
Timestamps :
00:00 Introduction
01:57 Converting Traditional Retirement Accounts to ROTH Accounts
03:18 The Sweet Spot for Roth Conversions
04:07 Roth IRA Conversion In 2022
05:37 Roth IRA Distributions Don’t Count As Provisional Income
07:19 How Should You Pay the Tax on Roth Conversions
08:39 The Importance of the Roth 5 Year Rule
09:54 When Does a Roth Conversion NOT Make Sense?
★☆★ Part 1: How to Keep Your Social Security Tax-Free ★☆★
★☆★Part 2: Why Current Tax Rates Are So Attractive for Planning ★☆★
★☆★Part 3: How Much Should You Have in Your Retirement Accounts to Create a Tax-Free Income? ★☆★
★☆★Part 4: Why the Roth 401(k) and Roth IRA are so Important to a Successful Retirement Plan ★☆★
[About] Colin Exelby is a Certified Financial Planner Professional™ or CFP®. He owns the virtual financial advisory practice Celestial Wealth Management.
I provide financial planning for business owners and their families that makes sense.
Transformational change is made when you focus on the big picture. My goal is to help you think outside the box about your life, your money, and your health to be the best you can possibly be.
We strive to help you:
*Optimize Your Cash Flow
*Minimize Your Taxes
*Build Your Net Worth
*Create a Lasting Legacy
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This aged nicely. This is one of those perfect times to invest in the market.
So if I have a low income who is also self employed and I want to take say $75k (from a settlement) put it in a traditional IRA And convert it into a Roth IRA.
What can I do to pay less taxes?
Self employed in 12% tax bracket before…if I can show my income below $41,755 I can have my money I want to convert into a Roth IRA taxed at 12% instead of 22%
Any suggestions?
I’ve never used any tax professional so I wouldn’t even know who exactly to get.
Tax free now, but as democrats take more and more control, they will be after roths soon enough to distribute it to people who never saved. Maybe they will need some to pay off these folks student loans. btw, I think even if you have to pay the taxes out of the conversion, it could be better off down the road.
If I convert a significant amount to Roth and the converted amount is "income" added to that year. I am self-employed and pay quarterly estimated tax. How do I avoid the penalty for missing the estimated tax too much (after the conversion)? Can I just go to the IRS site and pay more than the CPA-calculated estimated tax? Thanks for your input.
If I max out my 401k can I still do a back door Ira? Thanks for the great video
Thanks for the video. Great information. I subscribed.
get to the point
My financial advisor believes that Congress will take away the Roth IRA tax-free withdrawal benefit in the near future because they want/need money. We have no control over that. If they do that and you convert, you’ll pay tax on the money you take out of the Traditional IRA to put in the Roth, and then pay tax on it again when you take it out out of the Roth. I am with him.
You are basing your recommendation on the current rules. I do not trust Congress not to change the rules.
They’ve already changed the rules on inherited IRAs, which now have to be completely taken out and tax paid on the money within 10 years. No more stretching it out for a lifetime.
He sounds like a used car saleman!
another reason to not convert: you are moving from a high tax state like CA to a no income tax state like TX. Saves another 8-13%
In the 40 years old and sold his business example; I think because he is not 59-1/2 he will pay a 10% penalty on top of the taxes.
If you are older than 59 1/2 and you do a Roth conversion. Does the 5 year rule apply for withdrawing funds?
Can I put in money to trad Ira. And transfer to my Roth IRA. And ALSO contribute to Roth IRA for the same year??? I don’t see anyone talking about that.
So basically adding $12 k to my Roth IRA for the same year.
Thanks.