Episode 153: The Financial Advisor's Guide to Roth Conversions

In this episode, Alex Murguia and Wade Pfau are joined by Rob Cordeau to discuss the complexities and strategies surrounding Roth conversions. They emphasize the importance of long-term tax planning and the various factors that influence the decision to convert traditional IRAs to Roth IRAs. They explore the perspectives of financial advisors versus accountants, the timing of conversions, and the emotional aspects of financial planning. The conversation also touches on the implications of national debt and future tax rates, providing insights into how clients can navigate these decisions effectively. Listen now to learn more!

Takeaways

• Roth conversions can lead to significant tax savings over time.


• It's crucial to consider long-term tax implications rather than just immediate savings.


• Tax projections should be done annually to adjust strategies as needed.


• Advisors and CPAs may have differing perspectives on Roth conversions.


• Clients often have preconceived notions about Roth strategies that need addressing.


• Using standard deductions effectively can enhance tax efficiency in retirement.


• Roth conversions should be viewed as a hedging strategy against future tax increases.

Chapters

00:00 Introduction to Roth Conversions

01:31 Understanding Roth Conversions

03:08 The Accountant's Perspective on Roth Conversions

05:06 When to Consider Roth Conversions

08:02 Analyzing the Break-Even Point

12:15 Adjusting Strategies Over Time

14:11 Emotional Aspects of Financial Planning

16:17 Advisor vs. CPA Perspectives

19:58 Client Perspectives on Roth Conversions

22:26 Predicting Future Tax Rates

25:14 The Role of National Debt in Tax Planning

30:31 Hedging Against Future Tax Increases

31:12 Maximizing Roth Conversions

33:02 Conclusion and Next Steps

Links

The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/ 

This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”