It’s getting close to year-end, and Jason Speciner, CFP®, EA, and Regina Neenan, CFP®, ABFP®, are here to explain what Roth IRA conversions are, why they can be a powerful long-term tax-planning tool, and when they make the most sense. They’ll walk through situations where converting traditional IRA funds to a Roth IRA can reduce lifetime taxes — especially when current tax rates are low or future required minimum distributions (RMDs) might push someone into higher brackets. They also outline the practical steps for completing a conversion, emphasize the importance of having cash available to pay the tax bill, and highlight red flags that may mean a conversion isn't appropriate.

Takeaways

• A Roth conversion is essentially a bet that your tax rate today is lower than it will be in the future.
• Early conversions may help reduce future RMD-related taxes and create more tax-free growth over time.
• It’s a best practice to have cash available to pay the taxes on a conversion, ideally without withholding from the converted amount.
• Conversions work best when you don't need the money for at least five years and expect long-term benefits.
• Red flags include a lack of cash for paying the taxes on a conversion, no reason to expect higher future tax rates, or needing the funds soon.

Have a tax question for the show?

Email podcast@fpfoco.com, and Jason or Regina might answer it in a future episode! New episodes drop every other Thursday — always ad-free and no subscriptions required. Learn more about FPFoCo at fpfoco.com and connect with us on social media @fpfoco.

Disclosures

Jason Speciner and Regina Neenan are investment advisor representatives of FPFoCo, a registered investment advisor. The information in this podcast is for general educational and entertainment purposes only. It may not apply to your individual circumstances and should not be considered financial, investment, or tax advice.

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