GeneralThe WorryFree Retirement® Blog

Roth Conversion & RMD

By March 22, 2022 No Comments

Watch the video below to hear from Tony, Heather and LeAnn as they discuss the importance of planning around Roth Conversions and Required Minimum Distributions:

 

 

The “Financial World” does a great job of coming up with new, catchy buzz-words, many of which involve tax-saving strategies. Real retirement planning specialists know it’s not a one-strategy-fits-all world. So please do your research on any of these strategies or enlist the help of a trained retirement planning specialist and/or a CPA when committing to a strategy wherein tax-savings is the goal.

Roth Conversions have been all the rage and can certainly benefit Savers, but can also cause other headaches in your retirement. If you decide to convert some or all of your yet-to-be-taxed IRA account into a Roth, you’ll be on the hook to pay for the taxes within that tax year. Not a big deal if you’ve got the cash to cover the taxes and you avoid jumping up into higher tax brackets due to the conversion. HOWEVER… if you accidentally convert too much without consulting with a professional, you could have other headaches:

 

 

Higher federal and/or state income taxes owed

Penalties if not paid on time

Higher Medicare Part B Premiums in the future

Have to wait five years to take distributions without penalties, even if you’re already 59.5 – you may need that money sooner

 

The truth is, Roth Conversions are not for everyone. We assess these case by case and move forward depending on if this is the best match for you and your retirement GamePlan. This speaks to the importance of having an experienced planning specialist in your corner.

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