Understanding Roth

IRA Conversions

A Path to Long-Term Tax Savings

Learn About The Benefits Of Roth Conversion

Download a copy of our pamphlet to explore the benefits and costs of a Roth IRA conversion. Learn how this strategy can save you money on taxes and help secure your financial future.

What Is A Roth IRA Conversion?

A Roth IRA conversion allows you to move assets from a traditional IRA or other tax-deferred accounts (e.g., 401(k)) into a Roth IRA. While you pay taxes on the converted amount now, this strategy can lead to significant tax savings later, especially if you expect to be in a higher tax bracket during retirement.

Why Consider a Roth IRA Conversion?

1. Tax-Free Growth

Once funds are in a Roth IRA, they grow tax-free, and withdrawals in retirement (after age 59½ and holding the account for 5 years) are also tax-free.

2. No Required Minimum Distributions (RMDs)

Roth IRAs don’t require RMDs at age 73, unlike Traditional IRAs, allowing your money to grow tax-free for as long as you wish.

3. Lower Lifetime Taxes

By paying taxes now, you avoid potentially higher taxes on future withdrawals, especially if you expect to be in a higher tax bracket in retirement or if tax rates rise.

How Much Can You Save?

More than $100,000 in their lifetime, for many high earners. With a customized conversion plan with annual monitoring through our proprietary conversion tool, this number can multiply by 3-4x.

Sarah, age 45, has $500,000 in a Traditional IRA. Her current tax rate is 24%, and she expects it to rise to 32% in retirement.

Without Conversion: If Sarah withdraws $50,000 annually in retirement, she’ll pay 32% taxes, or $16,000 per year, totaling $320,000 over 20 years.

With Roth Conversion: Sarah converts $100,000 annually for five years, paying 24% in taxes ($120,000 total). This saves her $200,000 in taxes over her lifetime.

Our Proprietary Conversion Tool Can Save High Earners Hundreds Of Thousands Of Dollars Over Their Lifetime.

Why Convert a Traditional IRA Instead of Contributing to a Roth IRA?

Income Limits

High earners often can't contribute directly to a Roth IRA. Converting a Traditional IRA bypasses these income limits.

Income Limits II

You can make contributions to a Traditional IRA during high-earning years, then convert it to a Roth IRA when your income (and tax rate) is lower.

No RMDs

Traditional IRAs require withdrawals starting at age 73, but Roth IRAs do not, giving you more control over your tax planning.

Strategic Tax Planning

onversions can be done over multiple years, helping you spread out tax payments and avoid higher tax brackets.

Our Approach

Unlike typical multi-year conversion strategies, we take it a step further. Our proprietary algorithm analyzes your exact income and expenses plus 30 other factors to determine the optimal conversion timing and amounts, ensuring you minimize your tax liability. We adjust the plan yearly, so you never miss a chance to save, maximizing the tax benefits over time.

Factors We Use To Determine Optimal Conversion

  • Current tax bracket
  • Future tax bracket expectations
  • Age
  • Required minimum distributions (RMDs)
  • Marginal tax rate threshold
  • Capital gains expectations
  • Amount already in the traditional IRA
  • Available cash for taxes
  • State income tax
  • Retirement timeline
  • Social Security income
  • Medicare IRMAA surcharges
  • Net investment income tax (NIIT)
  • Potential tax law changes
  • Estate planning goals
  • Conversion timing within the year
  • Business Equity and Other Assets
  • Charitable giving intentions
  • Investment horizon
  • Projected investment returns
  • Alternative minimum tax (AMT)
  • Qualified business income (QBI) deduction
  • Client’s risk tolerance
  • Other sources of retirement income
  • Current deductions and credits
  • Inflation expectations
  • Health
  • Income needs in retirement
  • Business loss carryovers
  • Tax-deferred account contribution limits

Next Steps

If you have more than $200,000 in an IRA, now is the time to explore a Roth conversion strategy. Contact us to develop a customized plan that optimizes your tax savings based on your unique financial situation.