The current state of the market has many people wondering if this may be the right time to initiate a Roth Conversion. Depending on your situation, there are two main reasons you may want to consider a Roth conversion sooner rather than later…
Reason 1: Low Tax Rates
While we don’t know what future tax rates will be, we do know that tax reductions allowed by the ‘Tax Cuts and Jobs of 2018 Act’ are scheduled to change on January 1, 2026. This could result in an increase in your tax rate. This means that it may be sensible to initiate a Roth conversion soon if you think your income will decline before the year 2026.
Reason 2: The Current Market
Oftentimes, the best time to initiate a Roth conversion is during a down market. When you sell the assets from a traditional IRA when their value is lower, your tax payments on those assets will theoretically also be lower. The goal is to reinvest those assets in a Roth IRA and hopefully see a future rise in the market, helping you to take advantage of tax-exempt appreciation.
There are a few other reasons you may want to consider a Roth conversion which we will list below for you:
Our advisors would love to talk with you if you think a Roth conversion might make sense for you soon!
Securities and investment advisory services offered through Royal Alliance Associates, Inc., member FINRA/SIPC. Royal Alliance Associates, Inc. is separately owned and other entities and/or marketing names, products or services referenced here are independent of Royal Alliance Associates, Inc. 3522 Paesanos Parkway, Suite 100, San Antonio, TX 78231. (210) 998-5000.