IRA to Roth IRA conversion after retiring
We are recently retired with 80% of our nestegg in a 401k and a 403b. Does it make sense to convert some to a roth to take advantage of current low tax rates and have tax-free distribution s down the road? We are 67 and 65. Thanks!
Terry Says
That’s a personal decision that involves some overall financial planning with a good advisor. Find one at www.Wealthramp.com — a fee-only FIDUCIARY, carefully vetted advisor.
Here4 are some of the things involved in that decision:
1. Do you have money OUTSIDE your retirement plans to pay the taxes? You should. And if you use that money, will you be totally illiquid?
2. What IS your income plan after retirement? Can you delay taking Social Security until age 70-1/2 (an 8% annual “return” on your money) by using retirement plan withdrawals until then? Or by using your out-of-retirement plan savings? That might be a better choice.
3. What makes you think your tax rates will be higher at retirement than what you can earn on your investments in the interim?
4. How will you feel if you make the conversion now, at today’s relatively high market valuations, and then the stock market tanks??
See, there’s a lot to consider, and a lot of that depends on having a good plan. So please get a FIDUCIARY advisor — someone who is not trying to sell you an annuity or a mutual fund — but just a good plan!!
