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Developing a Multi-Year Roth Conversion Plan
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Developing a multi-year Roth conversion plan involves some planning but can be a great strategy to get more in Roth accounts to be able to create a more tax-efficient income in retirement.
A Roth conversion involves moving money from a traditional IRA or 401(k) into a Roth IRA. The key difference is that traditional accounts are funded with pre-tax dollars and taxed upon withdrawal, while Roth accounts are funded with after-tax dollars but grow tax-free.
Why consider a Roth conversion? There are several compelling reasons:
1. Tax-free growth: Once you've paid taxes on the converted amount, your money grows tax-free in the Roth IRA.
2. No required minimum distributions (RMDs): Unlike traditional IRAs, Roth IRAs don't require you to take distributions at age 72.
3. Tax diversification: Having both traditional and Roth accounts gives you more flexibility in managing your tax burden in retirement.
4. Estate planning benefits: Roth IRAs can be an excellent way to leave tax-free money to your heirs.
For a transcript of today's episode, go to:
www.momentouswealthadvisors.com/blog/multi-year-roth-conversion-plan
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Brian D Muller(AAMS©), Founder, Wealth Advisor
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