Should you be considering a Roth conversion right now? David talks about the unique opportunities that a bear market provides.
What is a Roth conversion, why should you consider it, and is it a good idea in a bear market? David talks through several ins and outs about Roth IRAs and how they can fit into your financial plan on today’s show.
A Roth conversion is nothing more than taking money out of your IRA which is tax-deferred and putting it into a Roth IRA, which is tax-free. The only price of admission is that you have to pay the tax now. You’d do that if you think your tax rate in the future will be higher than it is today. There are certain income limits to whether you can contribute to a Roth IRA but anyone can do a Roth conversion.
Amidst a bear market, why do a Roth conversion now? Every market environment gives you an opportunity. The opportunity here is converting growth assets that are now down. You convert more shares that might be worth more ten years from now at lower prices. The results and gains will then be taken out tax-free. David shares an example of how this can save you money over time.
By keeping your eye on the long-game, there are opportunities in all markets. You just have to know where to look. If you want help from a financial advisor to help guide you through this, reach out to learn how it fits in your financial plan.
Listen to the entire episode or skip ahead using the timestamps below.
If you ever want your question spotlighted on the show or to ask David something about your retirement, email him at [email protected]
1:20 - Let’s talk about one of David’s favorite topics!
1:48 - What is a Roth conversion?
5:08 - Why would someone want to do a Roth conversion?
7:06 - How does a bear market impact a Roth conversion?
9:03 - Don’t wait for a market recovery.
14:16 - Should you take advantage of the opportunity?
"If you’re worried about your heirs inheriting something that is super tax-efficient, a Roth is way superior to basically any other thing that they can inherit, other than maybe life insurance proceeds."
– David Dickens
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