Are the Roth Conversion Benefits Worth It?

The Principle:

Are you considering doing a Roth conversion? Wondering if it’s really worth the trouble? Brian talks about how it can benefit you.

Honest Takes:

What does Brian think about Roth conversions? A Marketwatch columnist recently stated that the benefits of a Roth are relatively small and take a long time to pay off. Should you actually do a Roth conversion?

A Roth conversion isn’t right for everybody, but when do you know if the benefit is worthwhile for you? Brian says it depends on the situation and shares some client examples of times it does and doesn’t make sense to do a Roth conversion.

When have to start taking out the RMDs on an IRA, you will have to pay the tax. What will taxes do in the future? If your account balance is less, then you’ll have less to take out and less in taxes in the future. It’s important to look at your entire situation to figure out what works best for your plan. Are you operating based on reality or based on assumptions?

Does your plan include tax planning? The is a good chance that taxes will rise in the future. Is your plan addressing that? Remember, you have to consider several different elements within your retirement plan in order to make the best financial decisions.

Listen to the entire episode or skip ahead using the timestamps below.   

[0:23] – Is the financial benefit for a Roth relatively small?

[2:38] Brian shares a client example considering a Roth conversion.

[5:22] – Are you assuming taxes will go down?  

[7:22] – Most people are not converting for 20 years.

[9:02] – Tax planning is about the opportunity.

Today’s Truth:

“Tax planning is about opportunity. It’s being there at the right time and the right place to make the right recommendation.”

Brian Bowen


The Host:

Brian Bowen – Contact