Tax tips with Ed Slott
Time to talk about Roth conversions
As year-end approaches, Ed Slott says advisers should talk to clients about Roth conversions. Clients have a better idea of their income for the year, and advisers can help them project the cost of a conversion at this year's low rates.
Transcript
It’s time to talk to your client about year-end Roth conversions.
Now, earlier in the year you may have heard me talk about on one of these programs, one of these videos, to hold off on actually doing the conversion until around after Thanksgiving – first week in December, because this has been a crazy year. We didn’t know, there was so much uncertainty with all the situations, but also the client’s income.
By the first week in December, when capital gains are thrown off by certain fund companies, and maybe clients have a better shot of their income, that’s probably the best time that you can help them, along with maybe their tax accountant, to project the cost of a 2020 Roth conversion, to take advantage of this year’s lower rates.
You should also be identifying clients that have their income lower. Maybe they can convert more because maybe they have less income.
We’ve even seen situations where unfortunately some people lost income, lost jobs, and their income was so low they were able to convert for almost nothing. So, you know, that’s a silver lining.
If you want the conversion done at this year’s low rates, and we never know what is going to be next year, the funds have to leave the IRA by the end of the year. So start lining up your Roth conversion candidates now.
