Reach out to us directly at jim@fortress-wealth.com
What is the Break-Even on a Roth Conversion? Find out in this video.
Note: If the resolution is blurry, click on the settings wheel at the bottom right corner of the YouTube video, select “quality,” then select 1180p or 1440p HD.
For more information, head to
Benefits of a Roth Account
Maximize your Retirement Savings Efforts. You want to maximize your hard-earned savings to your retirement accounts, and for some, that means contributing to a Roth 401k and/or Roth IRA rather than a Traditional 401k-IRA. Applying careful analysis and making the right choice each year to achieve tax-efficiency can significantly reduce your lifetime tax bill total.
Tax diversification. If the vast majority of your retirement savings is in traditional, non-Roth accounts, re-labeling (converting) some of that as Roth IRA assets can make it easier to pay for big-ticket expenses, long-term care, education for heirs, etc. Pulling extra money beyond your required minimum distribution (RMD) from a traditional account will increase your taxable income, and Roth Conversions add more tax-flexibility for your distributions.
No tax headache for heirs. Most non-spouse beneficiaries must empty an inherited IRA within 10 years, which could mean large tax bills for them. With a Roth IRA, they still are subject to the 10-year window, but the distribution is tax-free and tax-free growth will continue for them during those 10 years.
Hedge against rising tax rates. Tax rates are near historic lows, and the federal deficit is at historic highs, so most people think rates will go up. Future tax rate changes are not 100% predictable, but they are a lot more predictable than investments. Even if your tax rate remained flat or dipped slightly during retirement, Roth Conversions can still make sense.
Roth Conversion Analysis Basics
A Roth IRA is an individual retirement account (IRA) that allows tax-free growth and withdrawals, provided certain conditions are satisfied. Also, the original owner is not subject to Required Minimum Distributions (RMDs), as with Traditional IRAs, 401Ks, and other tax-deferred accounts.
A Roth account can be funded from a number of sources including:
Regular contributions (these have annual limits)
Spousal IRA contributions
Roth Conversions (or Roth Relabeling) from Traditional IRAs, 401Ks, SEP IRAs, SIMPLE IRAs, 403Bs, 457s, etc
There’s no annual limit on conversions, but converting less or more than the optimal amount each year increases your lifetime tax liability.
Rollover of Roth 401k and After-Tax Contributions…(read more)
LEARN MORE ABOUT: IRA Accounts
CONVERTING IRA TO GOLD: Gold IRA Account
CONVERTING IRA TO SILVER: Silver IRA Account
REVEALED: Best Gold Backed IRA
No offense, but frankly I think this is a terrible example. Who has $20M in assets at age 54? Or any age for that matter? People with that much money aren't going to be as concerned about conversion strategies as those of us with much, much less. A more down to Earth, common place example would make this video accessible to people who are just trying to make their savings work for the long term vs. having millions to spare.
When you reach RMD age and are forced to take out ever increasing distributions, whether you want to or not, the Roth conversion won’t seem as painful.
THINKING OF LIFE AFTER RETIREMENT is really a pain in the ass…. What’s the best advice for someone worried over Retirement.
When you have a large amount of (extra) taxable income, like a Roth conversion, it can have a big effect on other expenses for that year including medical insurance subsidies from ACA, Medicare premiums that are income based, capital gains tax rate, high income tax surcharges, and probably others.
I do a conversion and Congress pass a new law and then I’m screwed