5 Reasons You Might NOT Want To Do A Roth Conversion

(don’t forget to checkout the video of this blog too)

There are many benefits to a Roth IRA.

One of the main benefits is that the money inside of a Roth can grow 100% tax-free.

This can be a huge asset in retirement allowing you to manage your tax brackets effectively…

AND, possibly even achieve a tax-free retirement!

Now, there are limitations for Roth IRA’s (income limits & contribution limits).

But there are no limitations to how much you can do in a Roth conversion.

They don’t always make sense, and here’s 5 reasons why you might NOT want to do a Roth Conversion:

✅ You make too much money

If your income is too high, then any Roth Conversion you do is going to be done in your highest marginal tax bracket (or higher).

✅ Your income is going to be significantly lower in retirement

If you’re used to paying taxes on $300k of income but only need $80k/year to retire comfortably… (house paid off, education funded, retirement funded, etc)…

Then converting to a Roth might not make sense when you can take taxable money out in retirement at LOW rates.

✅ If it’s going to drastically reduce your cash reserves

If you have to blow through all of your cash to pay the taxes on a Roth Conversions, you might want to reconsider.

Having cash is just as important in retirement as it is in your working years.

✅ If you have other sources of tax-free retirement income

If you have a large cash value life insurance policy that you can use in retirement for tax-free income then you might not want to convert your money to a Roth.

✅ If the market is REALLY high

The best time to convert is when the market is low (the Roth Conversion is discounted)…

But, if the market is high, you are going to pay income taxes on all of that market growth…

Maybe not the best idea.

If you’re wondering if it would make sense for you though….

Let’s Chat 💬😎