9 Misconceptions About Roth Conversions

Retire Ready with Kyle Hammerschmidt

In this episode, Kolin and Kyle discuss nine misconceptions about Roth conversions. They debunk the idea that Roth IRAs are always better than IRAs, explaining that the choice depends on individual circumstances. They also emphasize the importance of comprehensive tax planning and caution against winging it or converting large amounts without a strategy. The hosts address the misconception that Roth conversions prevent contributions to a Roth IRA and clarify that conversions do not count against modified adjusted gross income. They also discuss the misconception that paying the tax bill from savings is the only option and explain the potential penalties for underpayment. The hosts highlight the need for flexibility and multiple strategies when it comes to Roth conversions, cautioning against chasing a completely tax-free retirement. Finally, they debunk the idea that Roth conversions must be completed before required minimum distributions (RMDs) kick in, explaining that conversions can still be done after RMDs to lower future distributions.
Takeaways

• The choice between Roth IRAs and IRAs depends on individual circumstances and tax planning.
• Comprehensive tax planning is crucial when considering Roth conversions.
• Converting large amounts without a strategy can lead to overpaying in taxes.
• Roth conversions do not prevent contributions to a Roth IRA.
• Paying the tax bill from savings is not the only option for Roth conversions.
• Multiple strategies and flexibility are important when planning Roth conversions.
• Chasing a completely tax-free retirement may not be optimal for most individuals.
• Roth conversions can still be done after required minimum distributions (RMDs) to lower future distributions.

Subscribe to The Retire Ready Weekly Newsletter
Get more information on The Retire Ready Academy
Looking for personalized financial planning? Visit our website
Disclosure: You should always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. This podcast is intended for educational purposes only. Nothing in this podcast constitutes a solicitation for the sale or purchase of any securities. Any mentioned rates of return are historical or hypothetical in nature and are not a guarantee of future returns. Past performance does not guarantee future performance. Future returns may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions, and security positions, when sold, may be worth less or more than their original cost. MOKAN Wealth Management is a registered investment adviser with the SEC. Registration of an investment adviser does not imply a certain level of skill or training.