Episode 012:
Roth IRA Conversions Are For Everyone!


Episode 012 Summary:

Back by popular demand (probably), Host Josh Bretl is diving into the finer points of savings conversions in a follow-up to Part I of a very special Retirement = Freedom Podcast arc devoted to all things Roth IRA. If you missed the first installment, you might want to review the basics by listening to Episode 011, which you'll find here.

This episode is devoted to the timing of moving your savings from pre-tax traditional IRAs and 401k retirement plans into a Roth IRA whose growth going forward will be tax-free. The ouch, of course, is that the nest egg on which those future free distributions rest has to be taxed in the here and now. So it can be tricky! Josh explains some of the factors that must be analyzed when developing a smart conversion strategy. And a critical word of advice: Do your due diligence because once you click "convert," there’s no going back. It's important to be sure you’ve got a firm grasp of your current and future earnings and tax scenarios!

Feeling a little unclear about the finer points of Roth IRA conversions versus sticking with your traditional IRA? Josh and his intrepid (which isn't to say marathon-ready) cohost Dave Schmidt frame the decision in terms of weight loss and the pay-it-now or pay-it-later reality of managing good health. It's a two-for-one. Great financial planning education plus inspiration for that physical fitness regime you’ve been putting off. So put down that Puddin' Cake and join the fun!

Are you in the FSR Wealth Strategies family and curious to learn more about Roth IRAs? Click here to join our new private Facebook group and request a free Roth conversion analysis and maybe even win a chance at an original Dave jingle personalized just for you!

If you haven't tried it already, click here to get $25 off your first order of Cometeer Coffee. It's the greatest!

Key Takeaways

  • Stay tuned: Dave is going to be getting a podcast wardrobe upgrade!
  • About #TaxNerd and how it’s taking on a life of its own, especially among a certain demo of Saturday morning soccer players. (Could there be a promotional t-shirt in the future?)
  • Daddy Tax: The Next Generation. Could Josh’s kids be unfairly subjected to a Grandpa Tax? We are monitoring the situation.
  • Problems need solutions: How Josh advises retirees who think they’re stuck with bad decisions when in fact there are strategies available – like Roth conversions!
  • Defining a Roth Conversion: Taking money out of a traditional IRA and moving it to a Roth IRA – a taxable event that is added to your income. But once it’s there, it’s tax-free in perpetuity.
  • Revisiting Inflation: Dave weighs in on what Arby's charges for roast beef these days versus in the 90s: "I mean, I'm no mathematician, but that is far less of a better deal."
  • How and when to make the leap into a conversion? It’s based on projections from your current tax baseline into the future.
  • About tax bracket management: It’s based on using a household’s current tax return to best advantage by looking holistically at income trends and levels of taxation.
  • Why and when should you convert? There are reasons to delay and equally compelling arguments for doing it in the near-term. It’s all based on your individual tax profile. Professional financial planners can help!
  • Roth conversions in a down market can have a powerful spring-back upside over the long term, assuming eventual market recovery.
  • Warning: There’s no “undo” button. If you choose to make a Roth IRA conversion, there’s no turning back. So be sure you’re clear about your financial landscape.
  • More info available at R=F's new private Facebook group. Come hang out!
  • Don’t miss out on our staff java pick: Cometeer Coffee!
  • Roth conversions can be extremely beneficial, but no one enjoys the necessary pain of bearing the initial tax bite.
  • Cue the Jingle: Josh Relates to Dave Relating to Retirees. Yes, it’s that time again. Does it make more sense to lose the jiggle (think Puddin’ Cakes) sooner or later? Roth conversions now most likely will make the rest of your life better, but immediate sacrifice is required. Yes! The parallel works, especially if you don’t have a lot of weight to lose!
  • Not sushi. Not sandwiches. Our self-sacrificing, long-term planning co-hosts will be having a Roth conversion special today. #FatSalads. #TellTheWives!

Quotable Quotes

“If I had told people (at the presentation) how awesome you are as a person, but how terrible your clothing choices are, they would have been okay with it and I wouldn’t have felt so bad.” ~Josh

“We have a rule in our office that whenever you identify a problem and ask somebody for help, you have to have a potential solution. Your solution may be wrong. That’s okay. But you have to have a potential solution. I don’t just want to hear about problems. I want to hear about how you’re going to fix them.” ~Josh

“We’re all doing what we’re taught to do. We’re taught to put money away.” ~Josh

“With a Roth conversion, by paying those taxes now versus into the future there can be some very real advantages.” ~Josh

“When you do a conversion you have to be careful about what it’s going to do to your tax rates, your Medicare costs. You have to make those considerations because once you do it, you can’t undo it.” ~Josh

“Like losing weight or stopping smoking or all those things that are really healthy for you, (Roth conversions) can be an extremely healthy endeavor for your finances.” ~Josh

“Roth conversions are one of those things that have to be analyzed. They are unique to your situation.” ~Josh

Episode Extras

R=F's new private Facebook group. Come hang out!

Don’t miss out on our staff java pick: Cometeer Coffee!

About your Co-Hosts

A certified public accountant, Josh Bretl has spent the past two decades growing FSR Wealth Strategies into a firm that specializes in tax-focused retirement planning. Because taxes have the single biggest impact on how much you can spend in retirement, Josh is dedicated to developing individualized financial plans that extend and grow his clients’ retirement savings. Based in Elmhurst, Illinois, FSR Wealth strategically preserves and maximizes resources through tax-efficient strategies designed to fulfill retirement dreams.

Apart from producing and co-hosting The Retirement = Freedom Podcast, Josh's longtime friend Dave Schmidt is a content production and marketing adviser to local businesses and nonprofits. He’s also an advocate for t-shirts, all things 90s (especially the music), short walks and long naps. A serial “wallet forgetter,” Dave nonetheless swears that he has picked up the check on at least one or two meals with Josh over the years. Evidence pending.

Standard Disclaimer:
FSR Wealth Management is a registered investment advisor located in Elmhurst, Illinois. Information and opinions contained in this audio have been arrived at by FSR Wealth advisors. All information herein is for informational purposes and should not be construed as investment advice. It does not constitute an offer, a solicitation or recommendation to purchase any security. FSR is not providing legal, tax, accounting, or financial planning advice in this audio. These views are as of the date of this publication and are subject to change.