Hello everyone this week's subject is deciding whether to do *** Roth
conversion and I hope you are. Well perhaps you've been watching your
portfolio value drop in value in 2022 due to the markets and feel *** little
unsettled. If this could be you, there might be an opportunity to make
lemonade out of lemons. One strategy you could explore is doing what is
called *** Roth conversion. This refers to moving assets from *** traditional
Ira to *** Roth ira. The conversion generates tax on the amount converted
now could be *** good time to do *** conversion because you may be paying
tax on *** lower asset value due to investment losses in the ira. If
certain parameters are adhered to any money moved to *** Roth Ira generates
no future tax liabilities. All the growth in the Roth is potentially tax
free when withdrawn. If you are considering doing *** conversion, it's
important to determine the taxes involved. If you feel you're going to
be in *** lower tax bracket once you withdraw the money such in retirement
than *** vehicle offering *** current deduction, such as *** traditional Ira
might be *** good choice. If you feel your retirement income might generate
*** higher tax rate. The Roth Ira may be *** better choice. This could be the
case. If you have *** high pension and Social Security benefit, you do not
receive *** current tax deduction for money moved from *** Roth ira, but you
could receive potentially tax free future income, it's going to be
difficult but the judgment call is need as to what tax rates are going to be
down the road. One compromises to convert just enough to your, of your
traditional ira to get to the top of your next existing tax bracket to do
this attacks projection for this year would be helpful if you have the same
custodian for both your traditional Ira and Roth Ira, you can generally
transfer shares from one account to the other with *** lower share price for
your investments. You can transfer more shares, more shares in *** Roth Ira may
result in more tax free growth. If share prices rise over time caution
though, share prices can also drop, there is no guarantee any investment
will grow additionally, it is generally not *** good idea to take the taxes to
pay for the Roth conversion from the ira since this would generate
additional tax income using existing cash on hand to pay the taxes usually
the most tax efficient strategy. We mentioned that there were rules for tax
free distributions from Roth Iras for conversions you can withdraw the
equivalent of the converted amount at any time. If you withdraw additional
amounts such as earnings, there maybe *** 10% penalty if the money is taken
before *** five year holding timeframe period. Unless an exemption applies if
you are under age 59 *** half for conversions, the holding period is
considered to have begun january 1st of the year. You did each conversion one
final benefits for the Roth is the more favorable required minimum
distributions rule the tax regulations for traditional Iras don't let the tax
deferral continue forever. *** certain age is the rules forced the account
owner to take those required minimum. However, the original owner of *** Roth
Ira isn't required to take any funds from the account. If the spouse
inherits the account elects to treat the account as their own. The same is
true for the spouse. Now, if *** non spouse beneficiary gets the account,
those generation. Those distributions are subject of required minimum
distributions but generally are not taxable given the benefits to *** Ira,
it is worth considering *** conversion. You may have *** similar option with
your 401k. There may be *** Roth four oh one K option as *** conversion
option, putting assets with the potential for tax free long term growth
into *** Roth Ira can make *** lot of sense as there are quite *** few
considerations involved. We usually recommend discussing the pros and cons
with your certified financial planner