Considering a Roth Conversion Requires Analysis Beyond Income Tax Rates
Roth conversions are a tax-planning strategy that you can use to reduce the impact of taxes on your retirement portfolio. The strategy is a way to pay income taxes on pre-tax retirement funds (IRA, 401k, etc.) in exchange for future tax-free growth and withdrawals. The analysis is simple conceptually: if the assets in question would be taxed at a lower rate by converting them to Roth and paying tax on them today, versus waiting to pay the tax in the future when they are eventually withdrawn, then the Roth conversion…