With 2020 tax rates being what they are, e.g., 12% for single filers up to $40,125 and 12% for married couples (filing jointly) up to $80,250, now is a good time to consider a Roth IRA conversion. Notably, if you have space at the top end of your income tax bracket because your income is below $40K for individual filers or $80K for married filing jointly filers, then why not utilize the top end of your tax bracket to convert at a 12% tax rate.

Here are a couple more good reasons to consider converting NOW:

Converting while the market is down means you will pay less in taxes on stock conversions;
Tax rates may rise in the future (historically we are in a low tax time period); and
A Roth conversion can help combat the SECURE Act’s elimination of the “stretch IRA.”

To further highlight the last bullet point above, the SECURE Act pays for itself by requiring most IRA distributions to occur within 10 years of the death of the IRA owner. By doing so, the Government knows these distributions are likely to occur when the recipient is in their highest tax earning years, e.g., a 24% or 32% income tax bracket. Converting at a 12% income tax bracket to a “NO INCOME TAX BRACKET” for your heirs will help preserve the wealth you wished to transfer.

If you have questions about a Roth conversion, your retirement plan, or your investment portfolio, please feel free to contact Intelligent Investing at www.mynmfp.com/new-clients for a no-obligation consultation.

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David L. Hogans, Esq. is an author and the founder of Intelligent Investing, Inc., a registered investment advisor firm located in Albuquerque, NM. He earned his Bachelor of Science in Chemical Engineering (ChE) from Virginia Tech and his Juris Doctorate (JD) from the University of Dayton. Mr. Hogans is licensed to practice law in the states of Virginia and New Mexico, as well as, before the Federal Patent Bar. For more information about Mr. Hogans and his firm please see his filing with the Securities and Exchange Commission (SEC) (https://files.adviserinfo.sec.gov/IAPD/Content/Common/crd_iapd_Brochure.aspx?BRCHR_VRSN_ID=602988).