Should I Do A Roth Conversion? with David McKnight

[@thomassheppard2690]

Don't forget that higher income later in life will also increase your Medicare surcharges.

[@DavidMcKnight]

And lower them if you're in the zero percent tax bracket.

[@wacoharder]

Just as you imply that tax rates are probably going to increase, we really have no guarantee that they won’t change the law and start requiring some tax even on Roth distributions. As you say, they are going to need more and more tax revenue.

[@DavidMcKnight]

Thanks for your comment. Only 5% of all retirement plans are Roth. The big target is on the $35 trillion in IRAs and 401(k)s.

[@anthonycoppa9089]

What if you had $500,000 in your 401k and did a Roth conversion this year. Suppose that would bring your 401k down to $400,000. Also suppose that the $400,000 goes to $600,000 over three years in the stock market. Is the $200,000 gain in the stock market still subject to to 0% tax because you made a Roth conversion, or is the $200,000 gain subject to capital gain taxes? Thank you.

[@DavidMcKnight]

The only portion that grows tax-free from that point forward is the $100,000 you converted. Everything else stays in the tax-deferred bucket and is taxed accordingly.

[@anthonycoppa9089]

Sorry, not clear. What if you start with $500000 in your 401k. You make the Roth conversion and pay $100,000 in federal taxes. That leaves you with $400,000 in a Roth retirement account. Then in 3-4 years in the stock market your balance grows from $400,000 to $600,000. Do you pay no taxes on that $200,000 gain when it is withdrawn? Or do you have to pay capital gains or federal earned income on the $200,000 gain accrued after you made the switch to Roth? Question 2: To make a complete switch from regular 401k to Roth, do you first have to sell your stock positions or can you keep the shares without selling the stocks and just base the value on the current value of the shares? Question 3: How does one go about purchasing your skills and guidance? Thank you for your time.

[@DavidMcKnight]

@@anthonycoppa9089 1. The growth will be tax-free. 2. You can leave the stocks in the account during the conversion. 3. Go to davidmcknight.com and click on the work with David button.

[@ralphparker]

In my intent to convert prior to age 70, the same time I start getting SS.