If you think retirement planning moves stop at retirement, think again. For high earners, converting an IRA to a Roth IRA while you’re still working could be the worst time of all. Although it won’t make sense in every situation, retirement can be a unique opportunity for Roth conversions for some investors. Particularly for individuals who are holding a lot of cash or have proceeds from a windfall such as the sale of a business, a multi-year Roth conversion strategy is worth considering.
Considering Roth conversions in retirement
When you convert pre-tax money from an IRA to an after-tax Roth IRA, the amount converted is included in your taxable income. This is why it’s not typically advantageous for high-earners to do Roth conversions while working. But in retirement, without a paycheck, it can be a great opportunity to control your tax situation for the year and fill up the lower tax brackets.
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