Roth IRA Conversions: 10 Reasons to Convert

1. Taxpayers have special favorable tax attributes, including a high basis ratio, charitable deduction carry-forwards, investment tax credits, net operating losses
(NOLs), etc. This is because these attributes reduce the effective tax rate of the conversion.
2. Suspension of the minimum distribution rules at age 70½ provides a considerable advantage to the Roth IRA holder. This allows for additional tax-free deferral.
3. Taxpayers benefit from paying income tax before estate tax (when a Roth IRA election is made) compared to the income tax deduction obtained when a
traditional IRA is subject to estate tax. This is because the IRC § 691(c) deduction is inefficient.
4. Taxpayers who can pay the income tax on the IRA from non-IRA funds benefit greatly from the Roth IRA because of the ability to enjoy greater tax-free yields.
This is because of the ability to move funds from a “taxable” to a “tax-free” tax asset class.
5. Taxpayers who need to use IRA assets to fund their Unified Credit bypass trust are well advised to consider making a Roth IRA election for that portion of their
overall IRA funds. This is because the exemption is funded on an after-tax basis.
6. Taxpayers making the Roth IRA election during their lifetime reduce their overall estate, thereby lowering the effect of higher estate tax rates.
7. Because federal tax brackets are more favorable for married couples filing joint returns than for single individuals, Roth IRA distributions won’t cause an
increase in tax rates for the surviving spouse when one spouse is deceased because the distributions are tax-free.
8. Managing the 199A pass-through business deduction taxable income based limitations. Converting to avoid RMDs, for example, may help a taxpayer maximize
the deduction.
9. Tax rates are historically low. Higher tax rates in the future means more tax will be paid on taxable IRA distributions than the tax that would be paid on a
conversion at a lower rate.
10. 3.8% Net Investment Income Tax. A conversion may be beneficial for taxpayers because qualified Roth IRA Distributions are neither NII nor MAGI.


  • Requires beneficiary to establish Inherited IRA!

  • Allows you to defer the income taxes on your IRA even after you die for possibly 50, 60, 70 years or longer!

  • Protection against beneficiary’s spending habits, spouses or creditors

  • Keeps assets in your bloodline

  • May create a pension plan for your heirs

So Which Retirement Risk is Risk #1?

So, which retirement risk is the #1 risk?  Hands down it is LONGEVITY risk.  Why?  Because Longevity is NOT just a risk.  It is a risk multiplier of the other risks.  See, the longer you live, the more likely we will see inflation, the more likely the market will crash, the more likely you will take out too much money, the more likely you will need long-term care!  So, the “Retirement Research,” I have studied comes to one main conclusion – To retire successfully, you MUST take longevity risk off the table.

Two Key Questions About Retirement

When developing your plan, you need to ask yourself two simple questions…

What do I NEED my retirement income to do?

What do I WANT my retirement income to do?

The answer to the first question should be the same for everyone – your retirement income must cover your basic living expenses.  Looking at your current expenses, determine how much income you will need to address these expenses in retirement.  Pay special attention to those expenses which may be reduced or eliminated all together, such as clothing, commuting and professional fees.

The second question may be a little more difficult to find out…

6 Steps to Retirement Security

  • Have a plan for retirement

  • Maximize social security benefits

  • Consider a hybrid retirement

  • Protect savings from inflation

  • Secure guaranteed retirement income

  • Plan for long-term medical costs

How To Get The Big Tax Savings From The Rich Persons Pension

Rich Persons Pension

Can I Help You Implement a Tax Reduction Plan?

Only 9 more weeks left to start the process to lower your Federal Tax Bill. Give me a call at 215-886-2122 to start the conversation to see if you qualify. tax PensionPlanSection199ATaxReductionSpecialist
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