05.10.2022 - Roth Conv
When and for Whom Are Roth Conversions Most Beneficial: A New Set of Guidelines, Cautions and Caveats
Presented by Edward F. McQuarrie, Leavey School of Business at Santa Clara University
Much has changed since penalty-free Roth conversions were inaugurated in 2010. Tax rates have gone up and down. The re-characterization provision went away. Heirs can no longer stretch out inherited Roth accounts over a lifetime. Medicare surcharges were expanded and began to adjust for inflation. The age to begin RMDs was pushed out to age 72 and the IRS changed the RMD divisor tables to further slow the pace of distribution.
These developments prompted our speaker, Professor Ed McQuarrie, to re-examine the rationale for Roth conversions. Join Professor McQuarrie to hear his research findings that exposed multiple flaws in conventional wisdom.
Attendees Comments:
Here are comments from listeners:
"Compounding tax drag" is a good term for a concept I have mathematically proven to several clients making the decision to invest in a ROTH IRA. Many feel they are in the top bracket and can only go down. But, the fact remains even at a lower tax bracket, the ROTH offers other flexibility.
- Aaron
I learned an aspect of determining a factor (IRMAA) that is relevant in Roth IRA conversions that I did not know before.
- James
It helped me to understand the L.T. benefits to IRA conversions going on through 20yrs after retirement.
- Jeff
It was interesting to see the spreadsheet with different tax rates and rates of return, tax drag, etc. I had thought that the benefit from a profitability standpoint for a conversion would have been greater and accumulated more quickly.
- Michelle
Roth conversions are beneficial even in constant tax rate case due to tax drag
- Graham
There are so many, such as; back door Roth IRA, saving on conversion from Traditional to Roth, and ETC.
- Sima
Watch for IRMAA; Look at Health / Life Expectancy; Look at potential state issues now vs lower or no state tax later
- Steven
"Compounding tax drag" is a good term for a concept I have mathematically proven to several clients making the decision to invest in a ROTH IRA. Many feel they are in the top bracket and can only go down. But, the fact remains even at a lower tax bracket, the ROTH offers other flexibility.
- Aaron
I learned an aspect of determining a factor (IRMAA) that is relevant in Roth IRA conversions that I did not know before.
- James
It helped me to understand the L.T. benefits to IRA conversions going on through 20yrs after retirement.
- Jeff
It was interesting to see the spreadsheet with different tax rates and rates of return, tax drag, etc. I had thought that the benefit from a profitability standpoint for a conversion would have been greater and accumulated more quickly.
- Michelle
Roth conversions are beneficial even in constant tax rate case due to tax drag
- Graham
There are so many, such as; back door Roth IRA, saving on conversion from Traditional to Roth, and ETC.
- Sima
Watch for IRMAA; Look at Health / Life Expectancy; Look at potential state issues now vs lower or no state tax later
- Steven
"Compounding tax drag" is a good term for a concept I have mathematically proven to several clients making the decision to invest in a ROTH IRA. Many feel they are in the top bracket and can only go down. But, the fact remains even at a lower tax bracket, the ROTH offers other flexibility.
- Aaron
I learned an aspect of determining a factor (IRMAA) that is relevant in Roth IRA conversions that I did not know before.
- James
It helped me to understand the L.T. benefits to IRA conversions going on through 20yrs after retirement.
- Jeff
It was interesting to see the spreadsheet with different tax rates and rates of return, tax drag, etc. I had thought that the benefit from a profitability standpoint for a conversion would have been greater and accumulated more quickly.
- Michelle
Roth conversions are beneficial even in constant tax rate case due to tax drag
- Graham
There are so many, such as; back door Roth IRA, saving on conversion from Traditional to Roth, and ETC.
- Sima
Watch for IRMAA; Look at Health / Life Expectancy; Look at potential state issues now vs lower or no state tax later
- Steven