Is There an Annual Limit on Roth Conversions? (Here's the Answer)

Is There an Annual Limit on Roth Conversions? (Here's the Answer)

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[joeblacke]

I was vetting a financial advisor who told me not to worry about Roth conversions. He said I was too old and needed a longer time horizon to make it worth while. He said I couldn’t recover the taxes paid in the decades I had till retirement. The fact that he didn’t realize that I didn’t need the funds at age 67 (or at all) or that I was going to pay the taxes with cash on hand, showed me he wasn’t the advisor for me.

People need to stop calculating rollover value by looking at age 65 or 67. Look at when the person is going to need the money. If someone has a large taxable bucket and tax deferred bucket, they can go decades without having to touch Roth (if ever).

[prny]

Do you recommend putting employer match into 401k and then rest into ira for roth conversion if there is no limit to how much we can convert annually?

[devonpeters]

I had a CPA tell me they think 30 years from now the IRS/Govt will find a way to tax Roth withdrawals/gains. Do you think there is any way they’d be legally allowed to do this?

[johnathancovey]

Is there supposed to be a letter T in the thumbnail picture?

[greglinsmythe]

What’s a converstion? Is it a new IRS-endorsed investment option?

[hectorcamacho]

There is no actual limit for conversion but conversion is treated as original income and subject to income tax. So you want to limit to lower bracket.

[nickdoyle-achievefinancial]

Good advice, leveraging the lower tax brackets is key. The big question is what taxes will be in the future, but nobody knows what that will be. It does seem my generation wants bigger government and more taxes.

[johnnyk]

Y'all need to do a better job of explaining yourselves re: your position on why high earners should not do roth. You present your thesis (>30% marginal tax rate, don't do roth) with no support as if its truth were self-evident. You give a throw-away conjecture that maybe the high earner will have a lower marginal tax rate in retirement with no analysis of what that would imply. The typical high earner, especially early in his career when the roth vs pre-tax question is most important, is not going to become an ascetic in retirement by choice. So, since he wouldn't have gone roth, per your heuristic, he's gonna have taxable income to support his lifestyle. Yes, he may run up the tax brackets each year, but if he's a high earner, the highest marginal rate will begin to dominate the ETR quickly. This leaves only one reasonably self-evident justification: the high earner must believe that the schedule of tax rates itself will change (and be lower). Now, if our high-earner has the ability to prognosticate about changes in tax rates with the amount of certainty necessary to justify not going roth, he ain't going to a financial advisor like y'all, he's going to big boy vegas (i.e. Wall Street) and pulling a Dr. Burry in the Big Short. There may be other reasons, including estate planning or charitable giving that may change this, but none of those are self-evident and will be taxpayer specific.

[prny]

I think I am still limited by ira limits