Hi, Mark Kohler here best-selling author, radio show host, CPA, and attorney, talking
to you about the ROTH conversion, That's right I'm not a financial adviser I'm
not going to tell you to buy some of my investments are stocked I am a tax
advisor helping you build wealth I'm a lawyer
trying to protect your wealth and I want to bring it all together so I'm going to
talk about something no one's talking about on YouTube and that is the proper
way or time to convert a traditional IRA to a Roth because there's some gaps in
the tax bracket and I want to expose it and show you where the perfect sweet
spot is for that transition all right so here's my handy-dandy whiteboard and
many of you that have watched other videos of mine you know what I'm talking
about here you got to go watch the videos on why Roth is so cool compared
to an IRA or a 401k and how you can have a Roth inside a 401 K topics for another
video of mine but this is our picture right we got operations we've got our
trust and we've got investments and right here I've got my after tax and pre
tax buckets and I want to take my IRAs or old 401ks that are in an IRA position
and move them over to a Roth slowly but surely we call it chunking I want to
chunk it that IRA and move it into a Roth position which now allows me to
drive a faster car and self-directed and get ten fifteen percent returns on a
regular basis or greater which I know is heresy for some of you that makes you
very mad to say that I would even assume you could do better than eight percent
in a Roth oh you can watch my other videos Roth IRA 1 million dollars mark
Kohler you'd love them part 1 and part 2 so what we're trying to do is talk about
this Roth conversion in the right spot okay so here's in this first chart we're
gonna talk about you single folks out there and where's that sweet spot for
the Roth conversion alright now this is what I want to expose there's seven tax
brackets and that's cool we can talk about all the different rates but
there's really two gaps no one's talking about right between the 12 percent
bracket in the 22 percent bracket is it 10 percent jump if you make too much
money over this level BAM you go into a higher bracket also there's another gap
right here at the 24 to 32 percent there's an 8 percent jump so think about
if I'm going to convert to a Roth now what we do by that is we're taking a
regular IRA that might have a hundred thousand dollars in it and I'm gonna
convert that to a rough now the day I convert it to a Roth I've got to pay the
tax on that conversion that's cool no penalty I'm just gonna pay the tax I can
keep the same type of investment in that Roth or I can move it to a self-directed
Roth custodian trust company whatever got lots of that to talk about in other
videos of mine but the minute I convert that BAM I pay tax so if I'm
at a certain income level and I convert 50 grand and it puts me into a higher
bracket a 10% higher bracket I mean I want to do that I may want to chunk at
the right amount to keep me in that lower bracket and then wait until next
year if I know where my bracket is and make sure I expose these two sweet spots
before my bracket jumps fair enough here's an example let's say I'm making
less than $40,000 we're right there that is a huge sweet spot because I'm gonna
be in the 12% bracket or less now I know some of you that are making 40,000 or
less or like I don't have time or money to convert to a Roth IRA right now I'm
just trying to make ends meet I get it but I'm just showing you this is your
first sweet spot because I'm under 12% so if I convert a hundred thousand
dollars like well I'd get into a higher bracket at that point let's say I
convert ten thousand dollars and I'm in this bracket and some of you may have
real estate losses that are bringing you down into the slower bracket you may
even have more wealth than you realize and be in this bracket so you want to
talk to your tax accountant and go yeah where am I at
so if I converted ten thousand dollars I'm only paying twelve hundred dollars
in tax because I'm in this bracket this sweet spot
now where's the next one well after twelve percent whoa I jumped all the way
up to twenty two percent so if I'm in this range I might want to play in this
area right here this is the playground I want to be but if I'm making okay mark
I'm making some more money I'm making eighty four thousand dollars or more
well look at this sweet spot it's a big one right here easy to find sorry all
these innuendoes I need to watch out for some of your maybe laughing okay so this
one's easy five between 84 to 160 here's my sweet spot I'm gonna only pay a
twenty two to twenty four percent tax rate but once I hit 160 grand I jump all
the way up to 32 percent I don't let that so for some of you that are in this
single area 84 to 160 you've got a really nice spot to be converting money
to a Roth and know that you're gonna stay between a 22 and a 24 percent
bracket very easy to calculate but look at your w-2 and don't convert anything
that's gonna take you over 60 ok let's talk to the married folks
okay now I married folks this one is very similar as well but we're dealing
with greater numbers because you're married so there's possibly two incomes
and the families so the brackets are they don't kick into a higher level
until a higher rate of income because there might be two incomes get it right
married filing joint okay so if I'm here this 12% area is all the way up to 80
grand where it was 40 for a single individual now I'm just rounding up it's
there's some fine print seventy nine whatever but this is about where we want
to be in this eighty thousand dollar range I'm only gonna pay twelve percent
on that conversion so again if I convert ten thousand dollars of my old IRA to a
Roth I'm only paying twelve percent in this range that's cool cuz I may have
again other write-offs that get me into this range but then I'm in this no-man's
land for a while and I do not want to convert any money between 80 and 170 to
a Roth potentially because it'll bump me all the way up to a 22% bracket now that
that's a big jump this is another 10% jump well this is this six I'm sorry 8%
jump right here so why jump into this no-man's land if I can stay over here
now if you're already making enough money that you're in this no-man's land
you want to convert and but not do any more than 320 1,000 see in this this
area of we're getting a twenty two to twenty four percent bracket right after
this point at three twenty one by M I go all the way up to thirty two percent I
do not want to be over there you'll miss the sweet spot so focus find it it's
right here right in front of you this is where I want to be in converting no more
IRA money that would put me over three hundred and twenty one thousand dollars
alright so that was fun hopefully had a few laps in that too
we're not gonna go there but here's the point we want to make sure that we're
having a planning meeting with our accountant before December 31st that's
right you got to do this before your end and choose how much you're going to
convert the old rule was you could undo some conversions before April 15th not
anymore we got some nice brackets under this GOP
bill where we're down to 37% into fewer brackets that's cool but I want to make
sure I'm careful and I'm making that decision before December 31st and pull
the trigger so that's what it's all about
on this Roth converting and I think you're gonna love it
this has really really been helpful for a lot of my clients so get out there
keep building wealth keep living the American dream and keep investing into
that Roth IRA it'll be worth million dollars more before you know thanks so
much for watching that video and I want to be your source for tax and legal
strategies it's hard enough to live the American dream without being out on the
web on Google trying to find answers to complex questions and just click in a
mouse hoping you got it right my team and I want to be a huge resource
treatment the law firm accounting firm by education resources on my site please
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