Apr 28, 2020
This week, I’m talking about some of the best and most unique financial planning opportunities available during this coronavirus crisis. There are several tried-and-true opportunities that present themselves in nearly every crisis and market downturn, but there are also several that are unique to this current crisis.
Today I’m talking about one of those tried and true opportunities that should be on your radar during every market downturn - Roth conversions.
I’ve talked about the Roth on the One Minute Retirement Tip more times than I can count, and for good reason. Once your retirement dollars are in the Roth, it’s not taxed again. The rules allow you to convert any dollar amount from your 401k and IRA balances into a Roth, but there’s a catch. Whatever amount you convert to the Roth, you owe taxes on.
The big tax bite keeps many people from taking advantage of Roth conversions in a meaningful way, thus subjecting themselves to often substantial future tax liabilities because of future required withdrawals from non-converted IRA or 401k accounts.
But when the value of your 401k or IRA drops because of a market downturn, you now have an opportunity to get more money into a Roth, because you can now convert a bigger percentage of your IRA and 401k balances to Roth than you would have otherwise been able to when those account values were higher.
Not sure if a Roth conversion is right for you? As a thank you to all of my loyal listeners, I’ll run the numbers for you to help you decide if a Roth conversion makes sense for you. Just email me your age, the amount you want to convert, and your expected income for 2020, and I will run a Roth conversion calculation and help you interpret the results.
Just send me an email - ashleym@truenorthra.com - again with your age, the amount you want to convert to Roth, and your 2020 expected income. That’s ashleym@truenorthra.com
That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.
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