Roth Conversions = Smart Tax Planning, Ep #32 

<p>You can’t control health insurance premiums going up. You can’t control rising prescription costs. But you can control your tax planning. As the old saying goes, “You have to make hay while the sun is shining.” We are still under the 2017 Tax Cuts and Jobs Act. Until that changes, the sun is shining and you should consider taking advantage of a Roth conversion. What is it? How does it help you? Listen to this episode of Retirement Made Easy to learn more!</p> <h2>You will want to hear this episode if you are interested in...</h2> <ul> <li>[3:09] What is a Roth conversion?</li> <li>[4:52] The 2017 Tax Cuts and Jobs Act</li> <li>[6:19] Comparing taxes from 2010 to 2020</li> <li>[9:02] Forced IRA/401k distributions </li> <li>[10:23] How much should you convert?</li> <li>[13:10] When do you do a Roth conversion?</li> </ul> <h2>What is a Roth conversion?</h2> <p>A Roth conversion is biting the bullet and paying taxes <em>now</em> while the US is in a low tax environment. A simple IRA is a pre-tax, tax-deferred retirement account. If you want to convert $10,000 of your IRA or 401k, you’re choosing to pay the taxes now instead of in retirement. You can then take the money you converted and add it to an existing Roth IRA or open a new one. </p> <p>The beauty of the ROTH IRA is that it grows tax free <em>for the rest of your life</em>. You don’t have to convert your entire account. If your IRA is holding $100,000, you don’t have to convert it all in one year. You can convert it in bite-sized chunks. Maybe you convert $10,000 this year and $20,000 next year. The idea is to pay taxes now while they’re low.</p> <h2>The 2017 Tax Cuts and Jobs Act</h2> <p>In 2017, the Trump Tax Bill was passed. It lowered tax rates for individuals and corporations. The majority of Americans saw a reduction in their yearly taxes and the standard deduction increased significantly. Bill Bischoff wrote an article entitled “<a href= "https://www.marketwatch.com/story/two-years-after-the-tax-cuts-and-jobs-act-who-are-the-winners-and-the-losers-20