Common RMD Mistakes Retirees Should Avoid (And How to Fix Them)
05/09/2025
El planificador financiero de Palm Beach: su aliado para alcanzar la libertad financiera
05/16/2025
Are you getting closer to your retirement or maybe you’re already retired and wondering, is a rough conversion a good strategy for me? In this video, we are going to share the three scenarios when a Roth Conversion is not a good strategy for you.
The first one
Maybe you’re currently in a really high tax bracket and you know that in the future, you could be in a lower tax bracket. If you start converting right now, you’re going to pay a lot of taxes instead of in the future paying lower taxes there.
The second scenario
Will be maybe you are saying, Oh, I’m really worried about those RMDs require minimum distributions in the future, so I’m going to start converting really fast because I want to convert all my money in my entire 401k, in traditional 401k in traditional 401ks or traditional IRA or 403b, I’m going to convert everything in just two years.
You’re going to go for a really high tax bracket for those two years, and you’re going to be giving all your money to the IRS, and you’re going to be losing all the compounding effect of your money in time. So it’s not a good strategy.
The third scenario
Will be maybe you already have your money invested in a 401k in a really aggressive way with a really high potential of growing there, but then you convert that money to a Roth IRA, but you leave the money in a really conservative portfolio with a really low opportunity to keep growing there.
You’re losing that opportunity of your money to keep growing in the other side. Be careful also with that. These are just three scenarios, but if you want to go more in detail for your particular case, always consult with a certified financial planner.
