End-of-year planning has officially begun. My days are filled with questions about tax loss harvesting, end-of-year retirement contributions, and a plethora of inquiries about Roth conversions.
It’s always been my preference here on Thoughts On Money to tackle the “softer side” of financial planning, and I typically veer away from the more technical or nuanced topics. Primarily because these topics can be a bit of a snooze for the average reader, and my hope is that you would collaborate with your advisor/CPA/attorney for that type of personalized technical planning. My real aspiration as a personal finance writer is to teach you how to think.
With that said, I’d like to talk about a more technical topic today – Roth conversions. I will keep us more focused on the why as opposed to the how, and we will dive into some of the considerations that I think are often forgotten or glazed over.
Let’s start simple – what is a Roth conversion? Under the current tax code, an investor can elect to convert a portion or all of their traditional IRA (pre-tax monies) to a Roth IRA. Each dollar converted is considered taxable income, and the benefit is that the Roth account will then grow tax-free.
Links mentioned in this episode:
Trevor is a Partner, Director of our Private Wealth Advisor Group, and Author of Thoughts on Money.
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