3 Reasons to Perform Roth Conversions in 2021, 2022, and Beyond

Roth conversions are one of the most powerful tax strategies available to retirees right now. That is if you know how to maximize this strategy.

Right now, we are seeing a lot of information in the media regarding conversions. However, this also means we are seeing a lot of misinformation around conversions as well.

In our practice, there are three core reasons we believe you should perform Roth Conversions when they make sense for your situation.

#1: Avoid Tax Hurdles

We discuss quite a few in this video:
✅ The Social Security Tax Torpedo
✅ Minimize RMDs (Required Minimum Distributions)
✅ Avoid income related monthly adjustment amount (IRMAA)
✅ Avoid the Capital Gain Bump Zone
✅ and more...

#2: Ensure Other Retirement Accounts are more Valuable

Most assets you have will benefit from having less taxable income. Social Security can turn in a tax-free asset! Rental Income can fill up low and insignificant tax brackets.

Unrealized gains in your brokerage account can be realized at a 0% rate.

Roth conversions, if done properly can transform your retirement tax situation.

#3: Defend Against Future Tax Hikes

Most retirees that I speak with are concerned about future tax hikes. And understandably. The national debt may indirectly be one of the biggest wealth destroyers in the future.

Learn how to defend against future tax hikes with Roth Converisons in this training.

#RothConversions #RetirementIncomePlanning #TaxStrategies

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Always remember, "You Don't Need More Money; You Need a Better Plan"

[donofd]

BTW, this is without a doubt one of the best financial advice channels on YouTube. Even though I know it’s not “advice” legally.

[davidfolts]

Taking the long view sharpens the short. Well done gentlemen.

[slimdawgwoof]

This is the best summary and explanation of all the post retirement traps I have ever seen. Thank you.

[tvstation]

Outstanding video. I've watched a lot of ROTH overviews, but this was definitely one of the best!

[HH-gnqt]

I am turning 50 this year and for the first time I realize retirement is coming sooner than later (and frankly I am looking forward to it!). The amount of complication in retirement is astounding and I have oblivious since my focus has been on accumulation thusfar. I plan to get up to speed and your videos are very helpful. Thank you!

[donofd]

I am so mad at myself for not looking into tax codes and Roth earlier. I am 69 and have been converting to the top of the 12% bracket for the last 3 years. But if I had started years ago I would be paying 0% taxes on my social security instead of 85%. If you hire a financial planner/advisor make sure they are considering your tax situation not just accumulating assets to increase their percentage of the pie.

[patricktaylor]

Sub'd! Well done. Your ability to "peel the onion" utilizing actual numbers makes this the best evaluation on the topic I've seen on YouTube.

[araslintakas]

I have many spreadsheets for future tax implications, but did not consider that when I start my RMDs that money will be put into a taxable account, created more income. Argh.
Great video. Lots of information and I will be watching it several more times!

[sboucher]

Trying to figure out how much we can convert this year without going into second IRMAA category for 2023 as we got in a high IRMAA for 2022 due to converting too much. How do you guestimate the 2023 IRMAA ranges for 2021 income since it won't be available till next year? What is the safest income to shoot for without pushing into the 2nd bracket? We're tying to bring Traditional IRA balance down now before we take SS in 5 yrs from now and before one of us dies!

[joerozario]

I will be soon 50 and I am contributing to Roth 401K and Roth IRA (via backdoor conversion) even though my tax rate in future might be lower than today. The way I look at it, I would rather pay taxes now even if I am probably paying at a higher tax rate and continue to build on Roth retirement nest egg.

[TimBothwell-xk]

@Safeguard Wealth Management At appx. 33:57 you say that generally, unless you have a large pension, you don’t want to eliminate all tax deferred accounts. At what annual pension amount with Joint-and 100% Survivor Annuity would you consider eliminating TDA’s with a near-max age 70 SS benefit?

[thomasdipaolo]

Just retired. Appreciated the helpful info. Also lets wipe out those created/ing national debt

[kcanyon]

I love what you said that it is crazy not to do the conversion. I know it is painful to pay tax now, but it is much worse to pay tax in a much higher rate and you can't do anything about it.

[jt]

Excellent information! Thank you. Just subscribed.

[warrenpeece]

An increase in taxable income, like a Roth conversion, can also affect other income based taxes and expenses for that year. For example, the stimulus payments in 2021 - thousands of dollars could have been lost. Also medical premium subsidies from ACA, Medicare premiums that are income based, tax surcharges on high high income, both state and federal. This can add up to tens of thousands of dollars over and above the tax paid on the conversion.

[lseh]

Why, your great. Where are you located?

[Just_forfun]

Tax code is written to punish singles, couples benefits, deductibles could double. Housing costs are a biggest expense, for eg. a couple or a single person living in a 1 bedroom condo have same expense. Widow trap happens, because the favorable taxation, and doubling of benefits disappear when a couple become single.

[sandradelgadillo]

Where can i go for resources and/or information if i still don't understand this. I've rewinded several times & i'm still having a hard time.

[garyreading]

Great info Thx. Do you think they will extend the tax cuts or not?

[MarathonMadman]

Do you have an updated chart on the “Annual Opportunities”’? I’m thinking that when the Fed decides to finally stop QE and raise the interest rate in March, 2022 - it will probably exceed any opportunity we’ve had in the past 14 years (2008) to do a Roth Conversion. Any chance you might update that chart?