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Traditional IRA & Roth Conversion

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If you have a Traditional IRA, you may benefit from doing a Roth conversion this year (and if you already performed a conversion this year, you still have time to do an additional conversion before year end). We typically favor Roth IRAs (over Traditional IRA balances) as Roth IRAs grow tax free and your withdrawals are also tax free, once certain conditions are satisfied. However, we believe that now more than ever you should consider doing a Roth conversion while the stock market is down. In addition, this could be your last chance to do a conversion this year as you must complete the Roth conversion by December 31, 2022 for it to count for the 2022 tax year!

A lower stock market makes the Roth conversion strategy more appealing. This is because when your Traditional IRA account value decreases, you are able to convert the same number of shares at a lower cost. For example, let’s say you have a Traditional IRA worth $1,000,000 and the value drops to $800,000. You can save on taxes by converting the lower value ($800,000) rather than the original higher value ($1,000,000). Please note this is just an example and you would not have to convert the entire amount of your Traditional IRA.

Please let us know if you are interested as soon as possible so that we don’t miss this opportunity!

Converting from a Traditional IRA to a Roth IRA is a taxable event.

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Notebook with the words traditional ira and roth ira

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