Converting a Traditional IRA to a Roth IRA – Episode 138


Best-selling author Kim Butler and no B.S. money guy Todd Sterobel talk about how to convert a traditional IRA to a Roth IRA. They discuss the Who, Why, and How to convert. They also talk about certain situations in which converting to a Roth IRA would not be beneficial. There are several advantages of converting to a Roth IRA that Kim and Todd discuss in detailed, yet simple and clear terms.

Tune in to find out how to take control of your finances today. If you would like the opportunity for us to answer your question on the show or to be a guest on our show, be sure to keep sending us questions and reach out to us!


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Show Notes:

00:00 Introduction

01:02 There is no income requirement for converting a traditional IRA over to a Roth IRA

01:26 Kim answers the how, why, and who the Roth IRA is a good strategy for

01:56 The Who: converting can be beneficial if you have the dollars to pay the tax that are going to be due

03:06 Converting is good for people who believe that taxes are going up, that want to access the Roth IRA tax laws, and have extra cash sitting around

03:47 Yes, you can do a partial conversion

04:38 If Hillary Clinton’s plan goes through all loopholes may be cut so this might be your only time to convert to a Roth IRA

05:02 People are believing that taxes are going to go up– it would be beneficial to go ahead and pay the taxes now and put those tax dollars into a Roth IRA and you would not pay taxes on it in the future

06:13 The Why: You have enough dollars TODAY that you are willing to pay the tax with. You may want to even take a lower income this year and convert to the Roth IRA and because you are in a lower tax bracket, you pay lower taxes on the IRA conversion

07:19 Todd makes a point that those parents sending their kids off to college and trying to receive financial aid, may NOT want to convert to a Roth IRA as having that extra income could affect that negatively

07:47 Kim talks about the advantages of the Roth IRA– it’s like the old adage: Roth IRA law is like paying taxes on the seed, and not on the harvest

08:42 One of the differences between a traditional IRA and Roth IRA is that a traditional IRA pays taxes at distribution, whereas a Roth IRA does not

08:59 The How: There’s 2 ways– 1. A simple conversion just requires paperwork 2. Get a discount for that conversion in other words, get taxed on a lesser dollar amount

11:12 There are no penalties for converting to a Roth IRA

12:41 Special email for podcast listeners only is: we*****@Pr****************.com get the ebook audio version available also

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