Use Your Roth IRA Conversion Opportunities While You Have Them

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You have enough income from other sources still coming in, and this burdensome requirement does little but elevate your tax bill.

Use Your Roth IRA Conversion Opportunities While You Have Them

Certain situations arise where converting your traditional IRA to a Roth can be done with lower-than-normal taxes owed. If you time your conversions well, you can remove substantial portions of your wealth from the RMD trap by the time you retire.

The reason is because money in traditional IRAs must be withdrawn b  and taxed b beginning at age 72 (as of the year 2020), but money in a Roth does not.

When you make this conversion, you do owe taxes for it that year. But after the conversion, you will owe no taxes on all future gains. Knowing when your most tax-advantageous IRA conversion opportunities have come requires some awareness and is best done with the help of a wealth manager. For instance, suppose you have a down year in your income. That might be the year to do a large conversion, because you can do so without bumping up to the highest tax bracket.