Investment people pushing Roth conversions

[schirallicpa]

I don't know what it is like in your area, but we do not live in a very wealthy area.  And people in my area rarely fall into a higher tax bracket when they retire.  

I can't tell you how many times I have had clients ask me if they should convert Trad IRA to Roth.  And these are fully retired clients, over 59 1/2.  People around here a lucky to have a retirement fund of 1 million dollars. In fact - it's rare.  And to me it makes no sense at all to convert. But the investment people push and push and push.  And all I can figure is they are charging fees for it. 

It's rather exhausting.  But if anyone here can give me a good reason to convert in your old age - other than knowing you have too much and you're dying tomorrow and want the kids to get it tax free - then I'll buy it. 

 

[BulldogTom]

1 hour ago, schirallicpa said:

I don't know what it is like in your area, but we do not live in a very wealthy area.  And people in my area rarely fall into a higher tax bracket when they retire.  

I can't tell you how many times I have had clients ask me if they should convert Trad IRA to Roth.  And these are fully retired clients, over 59 1/2.  People around here a lucky to have a retirement fund of 1 million dollars. In fact - it's rare.  And to me it makes no sense at all to convert. But the investment people push and push and push.  And all I can figure is they are charging fees for it. 

It's rather exhausting.  But if anyone here can give me a good reason to convert in your old age - other than knowing you have too much and you're dying tomorrow and want the kids to get it tax free - then I'll buy it. 

 

I hear you.   If you are in the 10-12% bracket and you think you will be in the 28% bracket in a couple years, it makes sense.   I don't see it happening for my retired clients either.

Tom
Longview, TX

 

[mcb39]

Right on!!!  I get at least one every year.  They get a free dinner to go to a seminar and get talked into converting and never hear or understand the repercussions.  It makes me so angry.

On the other hand, I have the clients who call and ask how much they can withdraw without owing any tax.  Those are the ones that heard what I said to them at some point.  I never really have liked Roth IRAs and probably never will.  Like you, my clientele is primarily middle America or lower.  I only have a handful of fairly wealthy clients and they are trained to ask for advice before they make a move.

[BulldogTom]

There is a time and place for Roths in a financial plan.  There is a time and a place to do conversions (very low income years).   Conversions are not the solution to all financial and tax plans.

Tom
Longview, TX