Watch This Before Roth Converting in 2024…trust me.

One of the most consequential choices you can make when preparing to retire is whether you should do a Roth Conversion. It could save you millions of dollars.

When you perform a Roth Conversion, you are deciding to pay taxes today to get out of future taxes.

But is it worth it? By the end of this video -- you'll have a much better idea.

NOTE -- I ask a couple of questions, but feel free to scroll past the questions -- not required for the link.

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*ABOUT ME*

I’ve always been passionate about personal finance, investing, real estate, and helping people find the freedom to live their life with purpose. But when my dad died in 2015, I tried to help my Mom find an advisor to sort out her finances. Instead of a helping hand, I found an industry of financial advisors dominated by glorified salespeople working on commission — pushing products that were not in my mother’s best interest. Or advisors with minimums that shut-out all but the ultra wealthy. Disappointed with the options, I took matters into my own hands and launched Foundry Financial, a wealth management firm with transparent pricing that specializes in helping provide clarity around money — so you have the confidence to make smart decisions.My goal is to help a million people retire without worry!

📅 *THE BASICS OF RETIREMENT PLANNING*

Retirement planning has several steps, with the end goal of having enough money to quit working and do whatever you want. Our goal is to help people master retirement and retire without worry.

Step 1: Know when to start retirement planning. When should you start retirement planning? The earlier you start planning, the more time your money has to grow. That said, it’s never too late to start retirement planning. Even if you haven’t so much as considered retirement, don’t feel like your ship has sailed. Every dollar you can save now will be much appreciated later. Strategically investing could mean you won't be playing catch-up for long.

Step 2: Figure out how much money you need to retire, The amount of money you need to retire is a function of your current income and expenses, and how you think those expenses will change in retirement.

Step 3: Prioritize your financial goals. Retirement is probably not your only savings goal. Lots of people have financial goals they feel are more pressing, such as paying down credit card or student loan debt or building up an emergency fund.Generally, you should aim to save for retirement at the same time you're building your emergency fund — especially if you have an employer retirement plan that matches any portion of your contributions.

Step 4: Choose the best retirement plan for youA cornerstone of retirement planning is determining not only how much to save, but also asset allocation. It can make a massive difference in your retirement plan.

Step 5: Select your retirement investments. Retirement accounts provide access to a range of investments, including stocks, bonds and mutual funds. Determining the right mix of investments depends on how long you have until you need the money and how comfortable you are with risk. It’s often helpful to talk with an adviser to discover the right mix of stocks and bonds.

❣ *SPONSORED* No, this video was not sponsored.

⚠️ "DISCLAIMER:⚠️This is not financial or investment advice. This Channel is meant for EDUCATIONAL AND ENTERTAINMENT PURPOSE only. None of this is meant to be construed as investment advice, it's for entertainment purposes only. #retirementplanning #retirement #passiveincome

[williewonka]

Excellent video. I've been doing annual Roth conversions, to the limit of the 22% bracket, in order to reduce impact of future RMD. Once 2026 arrives, and taxes are raised, the conversions will be reduced to fill only the lowest bracket. We are living on the Roth accounts and SSI. So glad to see the potential tax savings of up to 2M using this strategy.
Thanks for a very enlightening video.

[OurWullie]

I managed to watch a few of your videos in the last few days. Your videos are very informative, and I appreciate your method of teaching and sharing your knowledge. I tried your tool and must say I’m very impressed, I particularly like the simple vs the more detailed approach you offer.

Thank you for sharing your story and knowledge on YouTube.

[TWJeffrey]

I'm retiring in 2-3 years at age 62-63. It makes sense to me to start the Roth conversions now, doing a partial over the next 3 years while I'm still working and have the extra money to pay for the extra taxes, being mindful not to cross into the next tax bracket. This is what I'm doing, I'm not waiting until I actually retire to start the conversations. Plus, the better 2017 tax brackets are expiring starting 2026 tax year.

[lynnebucher]

As someone who maxed pretax limits for about the last 12-15 years of my career, I wish I'd known more about RMDs and the IRMAA surcharges back then. I was totally focused on building the retirement balance while minimizing taxes. Did a Roth too for most of the last 20 years. Now I'm doing Roth conversions and pretax distributions for spending. The goal is to take taxable income to the edge of the edge of the lower IRMAA threshold to reduce the pretax balance in the golden years post-ACA until SS starts at 70, with limited conversions at age 70&71. It's a PITA to run all these calculations.

[SunvalleyMetaphysical]

Great video.. Retire a year ago at 61. Wife is retiring in couple months so have been moving cash into Roths while we still have wages. Next is to start some smaller Roth conversions and this video really helps get me thinking more deeply about the best taxing strategy. Thanks john

[TravelingTheWorld]

I am contributing 100% to the Roth 401K. I am 42 and started to do In Plan Roth rollovers. The main reason I am doing this is because currently my effective tax rate is 18.5%. That is for the state and federal combined. I guess anything is possible. But I highly doubt it that my effective tax rate will be this low in the future!

[jeanjasinczuk]

I find those analysis about Roth conversion always a bit oversimplified. For example, they are assuming the tax bracket can be filled up with the Roth conversion. But during the year of Roth conversion, need to leave on some revenu, which also most likely will be taxable in some way ( unless it is seating in a checking account bringing close to 0% interest). Another risk is being obsessed with the Roth conversion and target lowering the tax bracket, which means not enjoying the Gogo years.. for getting more money at age 85..

[userbosco]

This video represents exactly how YouTube can democratize financial planning and freedom. Excellent content. Thank you!

[philip]

Glad I stumbled onto your videos. Truly kicking myself for neglecting this topic, along with other issues the last 10 years … work distractions, gun shy from very poor advice 40 years ago, laser focused on paying off the house mortgage as fast as possible ( 6 years rather than the 30 year mortgage we took out @3.0% … a house is a roof over your head, not ant investment). Thank you.

[PeaceandQuiet]

I would like an analysis on pre-tax vs roth contributions. I would love to go all in with the roth, but the tax savings at tax time with the pre-tax route keeps me from making that jump.

[barbaraearlybird]

I have not yet filled out the tool but am looking forward to it. Sounds promising.
One very important thing this video made me realize is that I can save even more tax money by not converting the amount in my IRA that I want to donate to charity upon my death. To be more precise, since I can donate IRA money to non-profits without paying taxes on gains of what I donate, I would actually pay more taxes if I convert what I plan to donate.
If I learned just that from this short video, I can only imagine what more I will learn from the rest of your videos. I've been watching a lot of Roth Conversion videos - some good, some bad - and this is the BEST!!! Thank you!

[tslegers]

Good info, lots to consider here. I have a large IRA/401k, and small Roth accounts. We’re flirting with a 24% bracket, so it doesn’t make sense to do a conversion this year. But wife is planning to retire next year at 59. That will be a good time to start.

[gauravipal]

Please do consider that the dividends and interest in your taxable accounts will be taxed as ordinary income EVEN IF they are invested back automatically without taking a distribution. When determining what your income bracket would be while determining how much Roth Conversion you can afford to take in a given year while staying within a target tax rate.

[Jims-VanLife]

Thanks Kevin. I actively manage a taxable brokerage acct. and have taxable capital gains and dividend income, in addition to a large IRA. I am not taking social security yet but I am past full retirement age. I pay very high IRMA on the Medicare premiums for my wife and I which really pisses me off given the high taxes I have had to may in my life time. Roth conversion would just put me in a higher bracket now for many years up to RMDs. I guess I just let it grow till then.

[jack_U]

As a Medicare recipient, I'm limiting my Roth conversions to just under the expected IRMAA limit 2 years from now. I think it's helpful to predict what your EFFECTIVE tax rate will be. Don't forget that you've got the standard deduction plus for Medicare recipients, the over 65 extra standard deduction for each in a MFJ category. Then, of course, you're filling the 10% bracket, then the 12% tax bracket, then delve into the 22% bracket. For me with a spouse under 65, with Roth conversions plus all other regular income of $214, 000 of income, staying $2k under the IRMAA bracket, federal income tax is $29, 984 or about 14% effective. So not as bad as thinking you're paying 22%. My alternate would be to have only long term capital gains for the year, meaning a zero tax with as much as $128, 300 of LTCG. So why would I do the Roth conversions and pay almost $30k in tax? Future RMD plus 2X social security which for us means income from just these that puts us into IRMAA and high tax brackets which, of course go up in 2026.

[jonathanfoster]

one problem with roth conversions early before social security kicks in is it increases your income level and can eat into any price subsidies on healthcare through the ADA

[troyabbottmalbon]

Excellent video. Thoughtfully laid out and easy to understand.

[TexasEngineer]

Social Security for me is taxed up to 85%. I am old enough to need to make an annual RMD. I don’t have a use for the $30, 000 ish RMD. I use the RMD to pay the taxes for a $100, 000 annual ROTH conversion. The tax bracket stays the same at 22%. If one spouse dies, then the tax bracket increases for the conversions. The ROTH conversion is an easy way to put surplus money into a ROTH at no change in taxes. Eventually, all the 401k will get converted.

[ds]

Kevin, every day I am hearing something different. Tariffs, Tax Cuts, and who knows what? Thank you for your research and videos.

[joycewright]

I already made enough profit in my Roth to cover the taxes I paid last year on my conversion. Yay!