Strategy Selection

ROTH IRA

VOLATILITY BUFFER

TAX FREE INCOME

WEALTH TRANSFER

Roth Conversions Overview

What is a Roth conversion?
A Roth conversion is the process of repositioning your assets in a Traditional IRA or qualified employer sponsored retirement plan (QRP), such as a 401(k), 403(b), or governmental 457(b) to a Roth IRA. When converting your before-tax savings, you get the benefit of tax-free potential growth in a Roth IRA later.

Generally, a Roth IRA conversion makes sense if you:

• Won’t need the converted Roth funds for at least five years.
• Expect to be in the same or a higher tax bracket during retirement.
• Can pay the conversion taxes without using the retirement funds themselves.
• May not need the funds for retirement and may want to transfer them to your beneficiaries.

A Roth IRA conversion may not be appropriate if you:

• Are not sure what your tax situation will be like this year because once you convert you cannot recharacterize or "undo" the conversion.
• Have to deplete other assets to pay the taxes due on the conversion.
• Are pushed into a higher tax bracket due to the amount you convert.
• Will be in a lower tax bracket in retirement.
• Will be relocating to a state with no or lower state income tax.
• Are wanting to convert your RMD because RMDs cannot be converted. You must first satisfy your RMD and then complete a Roth conversion.

​Before converting there are a few things to consider:

• You cannot recharacterize. Understand your tax situation and ability to pay for the conversion because a Roth conversion cannot be recharacterized.
• The availability of funds to pay income taxes. The benefits of a conversion are increased if the income taxes due can be paid out of non-retirement assets. 
  • To help manage your tax liability, you may choose to convert just a portion of your assets. There is no limit to the number of conversions you can do, so you may convert smaller amounts over several years.
• Your time horizon. Generally, if you will need the funds within the next five years, a Roth IRA is not a good choice. This is because a five-year waiting period is required if you are under age 59 1/2 before you can distribute the converted amount without owing the 10% additional tax. The longer the assets in the Roth IRA can be left untouched, the greater the benefit of tax-free earnings potentially accumulating.

​Eligibility
Anyone is eligible to convert regardless of their income or tax filing status.​

ROTH CONVERSION OPTIONS

What strategy would you like to use?

• Highest Estate Value - Focus on leaving you with the most amount of assets at passing.
• Tax Bracket Limit - Choose a tax bracket you would like to max out (Bracket Tracker)
• Lowest Lifetime Tax Liability - Focuses on reducing the amount you would pay in taxes over your lifetime
• RMD below your Annual Deduction - Focuses on reducing your RMD to be under current Tax Deduction levels to eliminate paying additional taxes.

With all these choices, you can either:
Do nothing and pay the taxes at what ever the current tax rate is at that time

• Defer paying taxes today because you think taxes are too high
• RISK = May pay more in taxes over your lifetime and pass less to beneficiaries

Pay a portion of the taxes on the pre-taxed funds and bring your RMD's (Required Min. Dist.) below the tax deductions available every year. ​

• Reduce RMD to below the level of current deductions
• RISK = Taxes could increase, and deductions reduce

Convert 100% to ROTH and never worry about paying taxes again on these funds. Tax codes and deductions can change during any congress. 

• Eliminate RMD and future taxes on your IRA or 401k by converting to a ROTH
• RISK = May have less money but eliminate any future taxes or deduction changes

HOW DO YOU FIGURE OUT YOUR BEST SOLUTION?

• Always talk with your CPA
• Request a ROTH Conversion analysis from us to look at your numbers before you consult a tax advisor

SAMPLE ROTH CONVERSION

Keeping a Traditional IRA may actually cost you more than you realize. Here is a sample report that compares using a ROTH Conversion all at one time. What does this mean for you? Ask us for your report today!

Sample Report

ROTH IRA Info

Tax Free Income

These illustrations are for educational purposes only. Please refer to all insurance company illustrations for details you will need to make an informed decision. We provide these examples for you to better understand how the concept works.