Because of the new tax laws, more owners of traditional IRAs need to explore the potential benefits of a conversion.

That also applies to IRA owners who previous to the new tax laws explored the idea and dismissed it. Further, owners of traditional IRAs who were good candidates for a Roth IRA conversion before the tax reform may find that this is the best time for an even larger Roth IRA conversion.

Benefits Of A Roth IRA Conversion

If you are a long-term investor—particularly if you are someone who sees themselves as responsible for protecting and growing the family wealth, the “family stewards” so to speak, a Roth IRA conversion could benefit your heirs for generations to come.

Think of dividing your portfolio in a number of buckets with each bucket invested differently. The first bucket that you need to use in the short term for routine expenses should be invested very conservatively – with cash, CDs, maturing bond ladders, etc. The longest-term bucket is money that you plan to spend last and probably won’t ever spend unless all of your other resources are completely exhausted. We treat Roth IRAs as part of your longest-term bucket.

The Best Time To Do A Roth IRA Conversion

Ideally, the best time to convert your traditional IRA to a Roth IRA is when you are in your lowest tax bracket and when the stock market is down.

Ultimately, the new tax laws mean that Roth IRA conversions can benefit many more people even before retirement or who are currently in retirement. This is because, if you are married and file a joint return, you can have up to $315,000 in taxable income and still fall within the expanded 24% tax bracket. Many taxpayers who are still working, or who are over age 70 but previously sat in a high enough tax bracket to make a Roth IRA conversion unprofitable, may now find that this is the best possible time to make the change. This is especially true if you believe tax rates are likely to increase in the future.

So, what is the big take-away? It would be a smart move for many taxpayers to analyze the merits of a Roth IRA conversion. And, if previously you determined that a Roth IRA conversion was not in your best interest, you should probably revisit the idea—times have changed.

SOURCES:

The above narrative is a summary of the following hyperlink: https://www.forbes.com/sites/jlange/2019/03/05/new-trump-tax-laws-make-2019-the-best-year-for-millions-of-americans-to-do-a-roth-ira-conversion/#146ee65e3237

Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice. This material contains the current opinions of the author but not necessarily those of Guardian or its subsidiaries and such opinions are subject to change without notice.

Gracio Garcia is a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS) 160 Gould Street, Suite 310, Needham, MA 02494, (781) 449-4402. Securities products/services and advisory services are offered through PAS, member FINRA/SIPC. Financial Representative of The Guardian Life Insurance Company of America (Guardian), New York, NY. PAS is an indirect, wholly owned subsidiary of Guardian. The Bulfinch Group is not an affiliate or subsidiary of PAS or Guardian. Life insurance offered through The Bulfinch Group Insurance Agency, LLC, an affiliate of The Bulfinch Group, LLC. The Bulfinch Group, LLC is not licensed to sell insurance. 2019-77682 Exp 4/21