When life gives you a bear market, should you try hunting for a roth conversion?!
Bear hunting is not my area of expertise, but roth conversions in a bear market can be just as dangerous for investors.
Bulldog Financial Planning (BFP) is prepared to offer you retirement planning that incorporates all aspects of your financial plan in order to help determine if a roth conversion is right for you.
What is a roth conversion?
'Roth conversion' is a term used to describe moving money from a Traditional or Rollover IRA into a Roth IRA. This creates immediate tax consequences in the year of your conversion. The trade off for the extra taxes is that your investments will begin to grow tax free rather than tax deferred; however, a Roth Conversion is not always the best solution to achieve your goals.
Is this right for you?
At the end of the day, the answer to the roth conversion question depends on your personal financial situation. The following list is not exhaustive but this includes your age, retirement date, taxes, investments, estate plan and the state of the market.
Tax planning is important for your decision on whether or how much to convert because it helps estimate the tax consequences of a roth conversion. Tax planning through BFP involves a review of your past tax returns, your investments, your current income, future withdrawal requirements, and your current expenses. (Bulldog Financial Planning does not perform tax preparation.)
Investment strategies created by BFP are individually tailored to your financial situation and will help determine whether a conversion is the right fit. This is done by performing a detailed review of your investments including a cost breakdown, the effects each investment has on your taxes, and which account holds the investment.
BFP uses other factors to develop an investment strategy: for example - fundamental analysis, your subjective risk profile, general market research, economic and industrial analysis. Historical performance results for BFP investment strategies or discretionary accounts cannot be guaranteed in the future.
From an estate planning perspective, the beneficiaries of a Roth IRA are required to exhaust/distribute the inherited account within five years. This is different than how a Traditional or Rollover IRA account is usually treated. Traditional and Rollover IRAs can be eligible to spread out over a longer period of time. BFP can help you with these considerations too.
The value of this work is tremendous and will help you plan your retirement. Please reach out for a complimentary zero obligation consultation to review your goals, learn more about Roth Conversions, the historical performance of portfolios managed by Bulldog Financial Planning and receive a free estimate.