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$391K is for 1 year conversion?

Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.

Helpful example, thanks for posting it.

What about timing the market? If there's a good chance the market is headed to a correction, say like 20%, is it advantageous to convert when it dips and have less to convert or is it a wash?

How does it work with state tax? I'm sure it's different for each state.

As a soon retiree, keeping my 401k on course after a rocky 2022 is top priority. I have been reading of lnvestors making up to 250k ROI in this current crashing market, any recommendations to scale up my ROI before retirement will be highly appreciated.

Excellent presentation and explanation!

Wouldn’t the 100,000 be taxed at a higher rate and not at 20%? It will be taxed at the rate shown on the w2, that is 100,000 + 72,000? All income is cumulative on your w2.

I’ve been hearing a lot about Roth IRA conversions lately, but I’m confused about whether it’s the right move for me. I’m 47, with a decent 401(k) and a modest traditional IRA. With taxes likely going up in the future, should I start converting now, or am I too late?

Very speculative subject. You need a crystal ball to make any known "good moves".

Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got talking about investment and money. I started investing with $120k and in the first 2 months , my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and gets more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.

Can I Contribute to a Roth? I am going to earn close to 150k gross in 2024 in earned income (W-2) So after deductions I should be below the 146k income limit to contribute. But I do have some investment income as well. Does the investment income count or is it only earned income that counts towards the 146k income limit? The investment income is from CD’s and Treasury Bonds probably between 12-15k for the year. Btw I am a single filer no dependents or spouse. Thanks

Thank you for the important information. Great video!!

Not sure how you got to $284,116 to convert total. Wouldn't a couple's first $22,000 of income (using 2023 tax rates for married joint) be taxed at 10%? Then the next $67,450 be taxed at 12%, then the next $101,300 be taxed at 22%? I understand the argument that 24% tax rate is < 25%, but personally I wouldn't want to be paying more than 22%.

This presentation is bullshit. Everyone have known this unless he/she is very dumb or has no knowledge on basic finances.

You didn’t account for the clients effective tax rate on the 70K in SS during the current year (3-4% effective) - essentially your 20% tax in funds moved goes to much closer to 30% if not higher

The simple answer is NO NO NO NO........

I don't know how you can make a fair comparison of 1981 rates to now if you don't address the impact of inflation. The minimum wage was $3.25 an hour. That 33k at %16 rate was probably the spending equivalent of closer to 150k now. That 101k at %37 tax was probably closer to 500k in today's dollars. Most people probably fell in the %14 bracket back then. My guess is my dad probably made between 20k and 25k that year.

UA-cam commercials are ruining this video

8:30 minute mark. The 20% tax paid using cash? For this example, $20,000 for $100,000 conversion. The opportunity cost of $20,000 over the years have to be counted? In other words, although Roth IRA is 0%, it's higher since due to the opportunity cost of $20,000.

you should have started in your sixties...

Outstanding analysis. A Roth IRA is certainly better for inheritance.

This You Tube Video was "THE BEST' example I've viewed thus far ... The scenario described in almost identical to mine with only one exception as my wife is currently disabled and collects Medicare ... Great information ... Just subscribed!

I live in NJ, is heritance tax at the state level paid when you withdrawal the funds or or is it due the year that you receive the inheritance of stocks?

This is good. Thank you

Why does the government make it so convuluted

stop working and startbuilding in your roth ira...being 67 you have until you are 75 do it now...

Best explanation. Thanks!

Only flaw I see is the assmption of withdrawing the entire 200 grand out of the 401k and paying the taxes. If they only take the RMD out of the 401k the higher balance in the account will continue to grow.

I bothers me that he said that a lot of financial advisors weren't "trained". Surely these people aren't robots and has a brain of their own. Couldn't these folks take the time and initiative to do their own math and study the rules/laws? Jesus, these are highly paid professionals.

this is the dumbest question this guy could possibly ask... who would actually wonder this? your hypothetical person must be a hypothetical moron.

What's wrong here. 63 yrs old, enough to live on and $2M to spare. Leave some to kids, grandkids....., then immediately figure out how to have the Damn time of your life with the money you worked all your life for. Videos on saving 3% in taxes in the last good healthy years of your life. How Depressing....

Not a chance

I understood until you brought up 1981 tax bracket and how that applied to the conversation.

NQ!

63? Enjoy your life because you may die tomorrow u buffoon..

I’m 55 from southeastern Ohio but worked overseas all my life. I have savings of $1,000,000 and I'm ready for retirement, only concerned about the soaring inflation. Is this enough to retire comfortably, or do I need some sort of money management?

Why is this couple taking SS so early they would be better taking it later convert more IRA now

Buy GOLD Bullion . It will never be worth nothing. It will increase in value. It’s actually easier to buy than sell. Buyers of your gold want substantial discounts from Spot value of gold so you have to shop for the right buyers .

Could you tell me how you would evaluate the utility of doing Roth conversions if you had clients in the following situation? Clients in their 60s are currently in the 22% tax bracket and you are highly confident that the clients' own tax brackets, IRMAAs, etc. will be substantially higher later in life, whatever happens to the tax code. They do not expect to need any of their RMDs for living expenses, so they generally will be used to fund QCDs to the extent allowed, with the balance reinvested in the taxable brokerage account. And, they have sufficient funds to pay conversion taxes from taxable accounts. I think all of that would weigh in favor of conversions. But, the clients have already funded Roth IRA accounts to a level sufficient to provide all intended bequests to human heirs (with some to spare in case they want to pull from the Roth during a down market). 100% of their traditional brokerage account and IRA will be left to charities. Under those circumstances, when (if ever) would it make financial sense to do additional conversions?

you only factored in federal tax. In CA, we also need to pay 12% state tax in addition to 22% federal. so 1/3 is chopped off with this conversion. Not sure conversion is a good idea?

Another example of someone who isn't looking at the whole story. He takes out $200,000 in one lump sum and then removes the same amount from the IRA401K in a couple of years. You 401K or IRA grows tax free until you withdraw it. You have to live on this money and you take money out as you need it, not a large sum in one withdrawal. Also left out is the 5 year waiting period for Roth profits.

I'm 63, having retired three years ago. I recently rolled over my employer 401K to an IRA. (Main reasons for the roll over are the fees are lower, I received a $1,000 signing bonus, and there are more choices on what to invest in.) I have no interest in drawing Social Security at this time (why take a voluntary reduction in benefits for life? All of my "how long will my money last" spreadsheets indicate my portfolio will last longer when I _delay_ taking SS. In fact, the longer I delay, the longer it lasts), nor do I have any interest or need to withdraw any of my IRA funds. I currently have a passive income (rental property, and interest from CDs) that are enough to cover my monthly expenses. My plan is to slowly roll over the IRA funds to a Roth IRA... even if it takes 10-12 years or so. (The advantages of a Roth are appealing to me.) I will do this a little at a time, each year rolling over just enough to keep my income in the 10-12% tax rate. Since I will have to pay a tax on the IRA money at some point, it will be good to know I'm paying as little as possible. Is this a good plan?

What about investing the RMD that you don't spend in tax exempt municipal bonds? You will not get an S&P 500 return but at 73 do you want that volatility?

Yes!

Those upper tax limits would change. No way with those upper tax limits seen in the 1981 chart transfer over to 2026. They would not be in the 21% tax bracket for 2026 if only going by those 1981 numbers in the chart. As we know, and I realize it was just an example made by the presenter, those tax rates in 1981 are not the same as 2017. And even if we go back to the 2017 tiers, those upper limits would change.

no

Example does not fit everyone.

Excellent analysis!

Well done analysis, but I think a few important points were overlooked. What happens if at RMD age one or both need to go into assisted living costing over 100k per year? If they have to pay out of pocket any medical expense over 10% of AGI is a tax write off. In that case they could use the sizable RMD to pay the assisted living bill virtually tax free. This is something iLTC insurance brokers probably don’t want the public to know about. RMD funds can be used to pay medical bills. If you roll everything over early to Roth the medical bills will still have to be paid…your choice if you want to pay them with before or after tax dollars