Fixing 10 Common Roth Conversion Misconceptions (Costly Errors)
26,165
Published 2024-05-10
Timestamps:
0:00 Fixing 10 Roth Conversion Misconceptions
0:10 #1 - There An Inherent Benefit to Roth Assets
1:48 #2 - Anything I Convert Will Be Satisfactory
4:37 #3 - Next Generation Misconceptions
7:01 #4 - You Need to Wait 5 Years to Touch Your Conversion
7:47 #5 - Roth Conversions Prevent Roth Contributions
8:29 #6 - Conversions Only Make Sense if You Pay Taxes Outside of Your IRA
9:44 #7 - I Can Pay Conversion Taxes Next April
11:09 #8 - There is Just One Conversion Goal
12:18 #9 - Tax-Free Retirements are Great!
13:46 #10 - I Need to Be Done With Conversions Before RMDs
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All Comments (21)
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Right now, things seem odd. The US dollar is losing value due to inflation, but it is strengthening in comparison to other currencies and commodities like gold and real estate. Because they believe it to be safer, people are going to the dollar. I'm concerned that the rising inflation may lead my retirement funds to lose value. Where else could we put our cash?
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I'm 62 and just retired last fall. I just did my first conversion last month. I'm leaving my entire portfolio to my children to help them with their retirement, or to be passed on to my grandchildren, because I don't need it. I'm paying the taxes out of savings. Thanks for the informative video.
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When the stock market was way down I did Roth conversions with shares of stock. Now the value has more than covered what I paid in taxes. Win win.
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You are one of the few that understands the rules and uses MATH to determine the best course of action. Thank you for sharing.
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Learn the most from your videos. Great topics. Keep em coming
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This is one of the best Roth conversion discussions I have seen and demolishes the notion set forth by others that there is only one optimal way to do this and for a fee we can tell you. Well done!
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This was a great video and discussion Eric. The graphs and discussion were very helpful. I'm not sure how I missed this notification when it was posted but just found it today. Larry, Central Valley, Ca.
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This is great info! Dense and full of actual actionable steps. So much of finance YouTube is fluff, and general info is amazing.
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Every time I watch your videos, I am blown away by the analysis. Also, the blue background is fantastic! What color is that paint?!?!
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#5 is fascinating to me, because backdoor Roth contributions makes it almost completely moot. This is the kind of obscure knowledge I come here for.
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Great content! Thank you
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One thing that makes Roth conversions so appetizing right now is the low tax rates. Because of the Tax Cuts and Jobs Act, it’s very unlikely that we will be paying taxes at a lower rate years from now. And if you did conversions when the market was down late last year, congratulations. You converted a smaller amount, paid less taxes, and watched your portfolio grow over the past 6 months tax free.
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Wow, this somewhat “geeky” presentation is loaded with excellent wisdom and smarts! I only wish you had a flat/hourly fee model since even at your lower than typical % of AUM model fee structure, we really have no interest in handing over full management of our assets. We prefer simple and maintaining full control. We’re looking for expertise to review what we believe is already a solid, but not fully optimized plan, not take over management.
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Excellent video!
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The Commutative Property of multiplication: Changing the order of factors does not change the product.
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I love all of your videos - they are incredible. However, on point #9, if you are taking Social Security while withdrawing from your IRA, there is no 10 or 12% bracket. Filling the 0% bracket with withdrawals is optimal - as you mentioned in the video.
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Great video, Eric. Can you speak to Roth conversation misconceptions in regards to Back Door Roth operations?
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This is EXCELLENT
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Please review the state Tax Department guidance concerning Roth conversions.For example, your 401K type account or IRA could be considered an eligible retirement plan as such for state tax purposes only - state/FED employees for example. Furthermore, you need to review 1099-R box 7 as there should not be any check marked if pension payment. Know the rules for your state and tax treatment of conversions!
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I agree with what you said a huge indicator is the future tax rates. Another indicator for me is when the market downs a lot, like in March 2020, we ready that’s another perfect time to convert to Roth.
