Ask Terry Questions Roth IRA conversion

Roth IRA conversion

By Terry Savage on April 06, 2024 | Financial Planning / Retirement

I see a lot of advice regarding converting traditional IRAs to Roth. I honestly don’t understand it. Won’t most of us be in a lower tax bracket (or at least the same) when we retire? Why would we choose to pay taxes on our retirement savings now. I remember that the big selling point of traditional IRAs was that we could hold off paying taxes on our investment now so we could defer to when we would be in a lower tax bracket in retirement. What am I missing?

Terry Says

Not much. Conversions require immediate tax payments — and the big hunk of immediate taxes can also impact your monthly Medicare Part B premiums!
You might consider it in a bear market, when the value of your account is down and you think it will rebound. But I wouldn’t do it at near all-time highs!

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