Roth conversions can be a powerful retirement-planning strategy. Watch this clip from Retirement University’s online course, “Tax-Saving Strategies in Retirement” to learn how Roth conversions could potentially fit into your retirement plan.
What is a Roth Conversion?
Simply put, a Roth Conversion is the transfer of assets from a traditional retirement account to a Roth IRA account.
What are the benefits of a Roth Conversion?
- Once your traditional retirement funds are converted into a Roth account, they can grow tax-free.
- If your funds were to remain in a traditional IRA, you would pay taxes when the money is withdrawn in the future. When you make a Roth conversion, you pay the taxes on the converted assets today. This is often seen as a benefit of Roth conversions because tax rates could increase in the future.
- If you leave your retirement assets to a beneficiary, consider that they could be in a higher tax bracket in their working years than you are in your retirement. By converting traditional IRA funds to a Roth account and paying taxes now, you could potentially save your beneficiaries from higher taxes when they withdraw those assets.
Roth conversions could have a profound impact on your tax planning and estate planning strategies. Remember, a Roth conversion is just one element of your overall retirement plan. We recommend reviewing your comprehensive retirement strategy with a financial planner to see if Roth conversions could be a good fit for you and your family.
We encourage you to learn more in the full “Tax-Saving Strategies in Retirement” online course!
Remember that you don’t have to figure this out on your own. You can schedule a complimentary one-on-one consultation with a financial planner at The Retirement Solution!
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The information in this material is not intended as tax or legal advice. Be sure to first consult with a qualified financial adviser, tax professional, or attorney before implementing any strategy or recommendation discussed.