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Roth Conversions in Retiremement

Retirement Tax Planning Income

Roth Conversions In Retirement

One way to help manage your income both before and during retirement is to do Roth IRA conversions. This is a simple process that allows you to move money from tax deferred accounts like a IRA, your United Pilots PRAP to a Roth IRA. In general, the amount that you convert is added to your income for that year and will be taxed at that year’s tax rate. But then the money in Roth IRAs grows tax free and comes out tax free.   There are two potential benefits to doing these:  ONE - ideally you would do them in years where your tax rate is lower than what you expect in the future; and TWO they can help lower your required minimum distributions which begin at age 72. The combination of two has the potential to reduce taxes over your lifetime and help your money last longer.     There is no question everyone’s situation is different.   Roth conversions may be more beneficial to some and less so for others.   This means you will hear many differing opinions about Roth accounts and Roth conversions.  There is nothing wrong with that. No one is 100% wrong or 100% right, it simply means it is very situation dependent.   The only way you will know is to have comparisons ran based upon your specific situation.   For now, watch the video to help you know if Roth conversions in retirement are right for you.