In this video, we’re going to talk about your Roth IRA, specifically:

  • the best age to convert
  • how to pay the least amount of tax
  • and the timing

There are a lot of factors that come into play, so you’ll want to make sure you do these projections with a good CPA or a good financial planner. But there’s one age range where we see the most people start to convert their IRAs and pay the minimum amount of tax. This is also the period of time where they have a little bit more control over the income that they’re receiving. It’s the age between 60 and 70, after they stop working and before they start social security.

Before this age is when to start planning for your specific retirement income withdrawal strategies.

But between 60 and 70 is where you have a little bit more control over what you’re going to start to use as income these years. This is also the time when Roth conversions seem to be the most popular.

The reason why is because you’ve got control over income here. This is when you also have control over tax and how much tax you’re going to pay or what sort of income is going to be taxable.

When we do a Roth conversion, from traditional IRA to Roth, any money that you do with that conversion is considered taxable that year.

So if you’re in this period of time and there’s no social security and you have other investments or bank cash to use, it could be a good time to flip that switch and start to do the conversions while you’re in a low income tax bracket.

If we’re not using our IRA monies and if we’re not starting social security yet, where are we going to get income? What are we using to live on?

The people that have done this right plan ahead and they start to build up their non-retirement monies. This could be money in the bank or money in a taxable account that they can start to use, and really build up the first few years if they’re planning on doing this conversion strategy.

If you’re not in this age range yet, but you’re thinking of doing Roth conversions, then now is the time to start thinking about this side money that’s going to be funding you during this period of time.

What’s the right dollar amount to convert?

This is where a good CPA and a good financial planner comes in handy because you can do a tax projection before you actually convert anything so you know the outcome ahead of time.

And I recorded another video on the Roth conversion sweet spot where we’re using these different gaps between tax brackets to think about when you’re doing Roth conversions. And if you’re not subscribed yet, then consider subscribing and you’ll be able to see that video once it comes out.