The Long Term Investor Tax Hikes Ahead: Should You Do A Roth Conversion To Lock In Rates? (EP.172)
Oct 2, 2024
As tax changes loom due to the impending expiration of the Tax Cuts and Jobs Act, the importance of strategic planning emerges. Roth conversions can pave the way to significant savings, but timing and individual tax situations are crucial. The discussion highlights who stands to gain most from these conversions, with real-life scenarios for various taxpayers. Moreover, the need for personalized financial advice is emphasized, especially as individuals navigate complex federal and state tax implications before 2026.
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Roth Conversion Advice
- Consider Roth conversions now before potential tax increases in 2026.
- This lets you pay taxes at today's potentially lower rates.
Roth Conversion Explained
- Roth conversions involve moving funds from traditional to Roth IRAs.
- Future growth and withdrawals become tax-free after paying taxes on the converted amount.
Ideal Roth Conversion Candidates
- Those expecting higher retirement tax rates or wanting to avoid RMDs benefit most from Roth conversions.
- Fill up lower tax brackets without spilling into higher ones when converting.