Should I do a Roth Conversion. When Roth Conversion make sense.

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There is a situation where a Roth IRA conversion is the clear choice and is worth paying the tax upfront to take advantage of its unique benefits. However, in most circumstances, a Roth conversion is not for most. In fact, we think “Roth conversion” is a hyped marketing term. Marketing materials with Roth conversion themes are frequently designed by big investment and insurance product companies to get high net worth investors’ attention, making them feel that they might be missing something big in their tax strategy. Due to complexity of calculation involved in deciding if a Roth conversion is beneficial, an unverifiable justification with a “trust the experts” mindset is typically given.

However, please remember that in most cases, having more in a Traditional IRA to grow and compound almost always overrides the other stated technical benefits. In my opinion, Roth conversions have been widely promoted by investment product companies and Internal Revenue Service, who stand to monetarily benefit from the transaction. An IRA must be liquidated to cash and tax withheld first. Then the remaining assets need to be reinvested in, usually, new mutual funds, new annuities, etc. All opportunities for more commission.