Should You Roth? Making the Right Call at the Right Time

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The Hosts:

Kevin Kroskey, CFP®, MBA – About – Contact

Tyler Emrick, CFA®, CFP® – About – Contact

Episode Transcript:

Tyler Emrick:

Roth accounts offer big tax benefits, but timing and strategy are everything. We’ll cover when to use Roth, how market drops could create smart conversion opportunities and why the mega backdoor Roth might be worth a look. All coming up today on Retire Smarter.

Walter Storholt:

It is another episode of Retire Smarter. Welcome. I’m Walter Storholt alongside Tyler Emrick, wealth advisor, certified financial planner at True Wealth Design, also a chartered financial analyst. We have a great show lined up for you today as we get to talk about… I love it whenever the mega backdoor Roth IRA comes into conversation, Tyler. Not many things in the financial world have this epic sound to it. Mega backdoor Roth is just like… I don’t know. It’s punchy. I like it.

Tyler Emrick:

It is punchy. Yeah, we got to emphasize the fun words for sure. But yeah, I mean, come on, Walt. We’re coming into Spring Weather’s breaking [inaudible 00:01:03] year Northeast Ohio. The Cavs are in the playoffs and ranked number one, so I don’t know. We got some good things to look forward here.

Walter Storholt:

We call this Momentum. Momentum, so that’s great. And yeah, we’ll see if now is the time for the mega backdoor Roth or other Roth conversion strategies, so this will all be fun to dive into. Other than that though, we will dive in just a second. How’s life treating? You sound like you’ve got a lot of positivity in your voice with spring rolling around here.

Tyler Emrick:

Oh, heck yeah. Hey, Northeast Ohio, man. We got to take advantage of it when we can. So yeah, we’re in a pretty good mood coming into spring, not looking forward to all the yard work ahead, although last weekend I got out and was able to do quite a bit, so I got a good jumpstart. At least I feel like I did. But yeah, no, it was good to get outside and enjoy the weather.

Walter Storholt:

Any big summer plans for you and in the girls?

Tyler Emrick:

Yeah, no, nothing too exciting. So we will see how things shake out and what ends up happening, but we came off the holiday weekend, so we got enough candy from Easter to last us into summer. So I guess that priority number one got met, but other than that, nothing too exciting. How about you, Walt?

Walter Storholt:

Nice. Not enough to get you all the way to October. It seems like you need enough Halloween candy to get you to Easter and then enough Easter candy to get you to Halloween.

Tyler Emrick:

Yeah, that’s right. That’s right. Now we’re busting at the ears at the chocolates in the house for sure.

Walter Storholt:

Nice, nice. Yeah, we luckily did the giving of chocolates and candies but didn’t receive many this year. Thankfully. That’s a good thing.

Tyler Emrick:

No, absolutely.

Walter Storholt:

We’re not overflowing. Other than Connie made cookies and I ate most of them, so there were some cookies that got consumed.

Tyler Emrick:

Well, I will say we did our first, this was the first year that, on Easter Sunday, we woke up and my wife actually had Easter egg hunt in the house where the girls literally woke up full of energy and Easter baskets walking out their room, running around the house. So I’m not much of a morning person, but seeing that was pretty happy and pretty thoughtful. But yeah, so it was the first year we had done that, which was pretty cool.

Walter Storholt:

Very good stuff. Well, let’s dive into our Roth IRA conversation today. Where should we begin?

Tyler Emrick:

We are. Well yeah, I mean we’re coming off of what, a couple episodes now walled of where the market’s at and the-

Walter Storholt:

We’ve been kind of constantly tracking some volatility up and down in the last few weeks. I don’t know about you, Tyler. I’m getting a little tired of the vault. It’s just exhausting. Are we down today?

Tyler Emrick:

There are plenty of headlines to go around, right, to say the least.

Walter Storholt:

Yeah, fatigue is setting in.

Tyler Emrick:

It’s always on our mind, rightfully so. I mean, it’s extremely important and as I was kind of thinking about what to do for today’s podcast, I wanted to talk about something that was related to the market volatility and certainly that would be helpful for the listeners as what we’re going through, but maybe talk about something that was maybe not as in-your-face, some of the typical stuff that we would go through when we experience what we have over the last say month, month and a half. And what I came up with was a pretty granular implementation of Roth conversions and how we can be a little bit more thoughtful and how now might be the right time. And you were happy to remind me, too that we did cover a similar topic. Well, back in 20 20th of March, we had a similar topic headline talking about those Roth conversions-

Walter Storholt:

So it’s been a couple of years.

Tyler Emrick:

… is that right? It has been, it has been. So I figured today we would maybe touch on that a little bit, but of course figured we would just break down Roth a little bit more. I mean the Roth was… I think it was established back in the late ’90s, ’97 or so. I don’t know what you were doing back in ’97, Walt, but-

Walter Storholt:

1997, I would’ve been 10.

Tyler Emrick:

Okay.

Walter Storholt:

Yeah, fifth grade getting ready for middle school, getting pretty pumped up back then.

Tyler Emrick:

Yeah, exactly right. Trying to sneak and Con Air or Face/Off or one of those crazy ’90 movies.

Walter Storholt:

There you go. Oh yeah, Con Air seems like I probably saw that 30 times right around that time period.

Tyler Emrick:

Yeah, that was my mom’s favorite so it was-

Walter Storholt:

It was always on TV.

Tyler Emrick:

… a staple in the house. Yes, absolutely. So the Roth has been around for a while now, but I think there are absolutely some areas when we think about how we can use a Roth, that is kind of confusing. I mean, you start talking about the different rules, income limits, heck, there’s different flavors of Roth, whether it be 401(K), IRA conversions, that type of thing. So I figured today we just kind of cut through some of that noise and talk about how we should use Roth and be a little bit more smart about how they apply to our families and clients’ unique situations. So that’s kind of the game plan, and I think we kind of got to start high level and maybe just talk a little bit about what are we talking about when we say Roth and what are some of the high level options, right?

Walter Storholt:

Yeah, I’m sure a good chunk of our listeners will know that difference already between Roth and traditional but we’re always picking up new folks, checking out the show and may still be newer to the retirement and financial planning world. So-

Tyler Emrick:

You got it.

Walter Storholt:

… always good start with the basics.

Tyler Emrick:

No, absolutely right, and I would agree wholeheartedly. That is the first part of the basics, right? It’s like, “Hey, when we’re talking about Roth, we’re mainly talking about retirement accounts. So generally speaking, you could save pre-tax or you could save Roth.” Now I say generally speaking because there is a third option, this option called after-tax. We’ll get into that a little bit more and not get back to the mega backdoor Roth, but we will talk about that here in a little bit. But generally speaking, pre-tax or Roth, and they’re just how they sound, pre-tax, you save into a retirement account, you typically get a tax deduction for it. And then of course when you go and pull it out later in retirement, go to old Uncle Sam gets their hands on a piece of that from tax standpoint.

Roth kind of just the opposite. You do not get a tax deduction, but of course it grows tax free and I think most of our listeners probably are like, “Yep, we got that. That’s nothing new. I think where most of the confusion comes in is this difference between a Roth IRA and a Roth 401(K), 403(b). So especially when you start thinking about, I don’t know what, but I get it a lot like, “Hey, I can’t even contribute to a Roth. I make too much money.” And I hear that quite a bit and what those individuals are referring to, the fact that, well, if you make over a certain amount of income per year, you might not be eligible to directly contribute to a Roth IRA. But of course a lot of the retirement plans through your employers over the years have adopted an actual Roth contribution option to them. So whether you have a 401(k), maybe some individuals might have a 403(b) if you work for a not-for-profit or one of the hospital systems. But in either case, those 401(k)s and those 403(b)s generally will give you two options on how you might be able to put money into those retirement accounts pre-tax and Roth. And of course we know that you can make any amount of money and still put money into a Roth 401(k).

Also a Roth IRA and a Roth 401(k), there are certainly some income limits that are tied to both. Or not income limits, excuse me, contribution limits that are tied to both. But the contribution limits to your 401(k) and 403(b) are much, much higher than what you’re looking to be able to put inside of those Roth IRAs. So the big caveat there is you might not be in that camp to where you make too much money and just not being able to contribute to a Roth completely. You just might have to go to your employer plan or utilize that infamous… The terminology, the old backdoor Roth, I’m sure you’ve come across that a few times, Walt, as well.

Walter Storholt:

Yeah, the Roth is the one financial thing that seems to get a lot of modifiers out there.

Tyler Emrick:

Yes. Absolutely.

Walter Storholt:

Or anything related to the IRA. I know we’ve talked about stretch IRAs and how they kind of went away and some of these things are actual plans and some are just sort of strategies attached to it, right? The stretch IRA wasn’t like an actual item, it was just the strategy of using an IRA, and I’m guessing the back door is kind of the same thing.

Tyler Emrick:

No, you’re absolutely right. In the case of the stretch, that was when you inherited an IRA or a Roth, you were able to stretch out required minimum distributions over the course of your life. Now with some of the legislation that’s been passed in the last handful of years, that stretch provision has been changed, tweaked, and you might be eligible, you might not. So they added a little bit of complexity there, but you’re exactly right. And the back door Roth is really, really no different. It’s not a separate account, but it’s this idea of, well, is there another way to get money into a Roth IRA specifically if you make over those income limits. And you can under certain circumstances, contribute money to a traditional IRA first and then do what’s called a subsequent Roth conversion, which can be very advantageous for families in that situation.

Now, of course, just as anything, Walt, they try to keep US financial advisors employed, so they got rules and caveats and aggregation rules that you need to be mindful of, but if you happen to be in that camp, it can be a pretty nice way to say, Hey, I’m putting money in my 401(k), maybe you’re maxing that out. I make too much money to directly contribute to a Roth IRA. Maybe I can do this back door Roth option where you do a traditional IRA first and then convert it to the Roth, which-

Walter Storholt:

Why even have that is my question. Are they just trying to make it more difficult so less people take advantage of it, or it just seems like if you’re going to allow that rule, just let people contribute to it.

Tyler Emrick:

Yeah, yeah. Well, and even the name implies it, right? The back door Roth, it sounds like-

Walter Storholt:

Yeah, it sounds shady. Let’s make a thing that sounds really shady.

Tyler Emrick:

It absolutely does. Yeah, no, we’ll see if any of the new potential tax legislation that might be coming this year changes any of that. But no, your guess is as good as mine. But we think about that back door Roth and this idea of a Roth conversion. I think that adds that third layer of kind of confusion and it’s like, well, what the heck is a conversion and how is that different than a contribution? Because everything that we’ve kind of talked about so far with the Roth is this idea of really putting new money into a Roth, whether it’s a Roth IRA or a 401(k), you’re contributing new money.

The idea of a Roth conversion is essentially taking money that you already have in a retirement account, a pre-tax retirement account likely, and shifting that money over to a Roth account. And by doing that, you’re essentially telling the IRS saying, “Hey, whatever I shift over into this Roth account, I want to pay taxes on it,” and you’ll pay taxes on it at whatever your federal marginal rate is and potentially state rate is when you complete that conversion. And these Roth conversions, I don’t know what, we’ve probably talked about it more than two handfuls of times over the years. They can be really impactful and planning tools for not only our retirees, but individuals that are still working as well. So Roth conversions are a big, big planning tool that our financial advisors use to manage individuals and families tax brackets. Not only now, but down the road.

Walter Storholt:

This seems like I’m kind of starting to see some of these possibilities bubble up a little bit here as you go further down the line of the details of these conversions. And I’m starting to see where these stars align perhaps in a down market or in markets that might be volatile. I think I’m seeing where you’re going with this.

Tyler Emrick:

No, you got it. So I think that’s a nice little segue. So we’ve kind of set the stage for, all right, what are we talking about when we say Roth, right? Are we talking about an IRA or a employer retirement plan? Are we talking about a contribution or are we talking about a conversion? Obviously there’s these quirky things called a backdoor Roth and a mega backdoor Roth, but let’s kind of bring it all together and talk about maybe at a high level what some of these planning opportunities are and what individuals and families need to be looking at when they’re considering is a Roth going to be appropriate for them. And you know what? I kind of think before we even get too granular, I think priority number one if you’re sitting there listening is you really need to have a decent understanding of what your tax situation looks like now and how that tax situation might change over time.

Now that doesn’t necessarily mean that you have to know, well, what laws are going to get passed and what’s your tax bracket going to be? We’re not necessarily saying that. What we are saying is we want to get some type of framework for how your tax bracket changes over time under current law, that’s the best that we got. And really start focusing on and looking at, well, what are these inflection points over the course of your working career and retirement that we can maybe take advantage of where your tax bracket is at that particular point in time? One of the biggest ones that come to mind, Walt, is like, Hey, you stopped working. So what happens to your tax rate when you stop working? For a lot of individuals listening, they might be like, “Well, I’m not working. My income’s going to drop. I think my income’s going to drop down quite substantially.” Right?

Some individuals that point in time or one of those transition points would be when they turn RMD age in their earlier mid-70s when they have to actually start pulling money out of their pre-tax retirement accounts. And those taxable distributions are going to come for the most part, whether you like it or not. Others, it might be an inheritance. Going back to that stretch IRA that you had mentioned before and some of the new laws there, well, when you inherit a retirement account now you might not be able to stretch payments out over your lifetime, so how does that impact what your tax rate could potentially be? And then really using that information to make better choices on, well, hey, should I save pre-tax or should I save Roth now? So I think it’s extremely important. Priority number one is to try to get some framework and understanding of how your tax rate’s going to change over time and into retirement. And while of course the best way to do that is a financial plan, which we harp on all the time here on the podcast.

Now if you’re listening and you’re kind of trying to wrap your arms around just like, okay, well when should I prioritize a Roth? I think there are a few kind of key situations if you find yourself in to where, all right, well a Roth might make sense and probably the easiest one that I’ll just throw out here is just, well, if you do that planning and get an understanding of how your tax bracket’s going to likely change over the course of your working career in retirement, well then, hey, if you’re in a lower tax bracket now versus down the road, well paying the taxes now and contributing to a Roth might make sense for you as opposed to putting your money in a pre-tax retirement account, getting a deduction, but then having to pull it out down the road at a higher tax bracket. So that’s probably the low-hanging fruit and easy one that kind of comes up all the time.

Walter Storholt:

Makes sense. That could be like maybe you have a spouse who’s going to take a year off of work to, I’m just picking a random scenario out here, taking a year off of work to have a child and take care of the child a little bit. Maybe they’re going to take a few years off. That might be an opportunity to say, well, our household income’s going to be lower before you go back to work a couple of years into the future, so now might be a great time to do some of these conversions. Would I be reading into that okay?

Tyler Emrick:

Okay. Yeah, it could be a time to do conversions. Maybe it’s a time to switch your contributions to your retirement plan from pre-tax to Roth and utilize some of that. So no, I mean I think that’s a perfect example for it.

Walter Storholt:

Okay, very cool.

Tyler Emrick:

Another one that I run into quite frequently is individuals that are trying to retire before age 65. 65 is a pretty big age because that’s when you get access to Medicare and if you try to retire before that, as we’ve talked about many times, is you got to figure out what the heck you’re going to do for healthcare.

And if you find yourself going on Obamacare or an ACA plan, well your income at that time and how much income actually hits your tax return becomes extremely important on what you’re paying for your healthcare. So individuals that are prioritizing saying, well, I’m probably going to go at 60 or my late ’50s, I don’t have a great solution for healthcare. You might be in a high tax bracket, but you might prioritize Roth savings because you’re trying to build a pot of money that you can pull from early in retirement that’s tax-free to maximize those healthcare subsidies or whatever the case may be, right?

Walter Storholt:

Yeah.

Tyler Emrick:

The other one or another big one is maybe not even as complex as understanding, “Hey, I’m in a lower bracket now and I’ll be in a higher bracket later,” but maybe you’re just in the same tax bracket and you don’t see your tax bracket changing really all that much. What I see a lot of retirees, especially when they start thinking about how they’re going to use their money in retirement, they think about, well, I need to get a certain amount to spend on a month in a month out basis. They’re not necessarily thinking about, well, hey, once I get my spending taken care of, should I be pulling more money out of my pre-tax retirement account because I can pull it out and pay the same amount in taxes, right? Now you might be like, well, why would you want to maybe pull that money out, pay taxes at the same rate and convert it over to a Roth?

Well, maybe you’re thinking about your estate plan and you’re saying, “Hey, I’d much rather my children inherit money in a Roth account as opposed to a pre-tax retirement account where they have to actually take distributions from it and pay taxes on it.” Or maybe you’re just like, “Hey, I think tax rights are as low as they’re ever going to get right now. I’d rather just take a bet that I’m going to pay at the same rate.” And then if tax rates go down the road, well then you kind of have provided yourself some flexibility there. Or maybe you just want flexibility in where you’re pulling your money from and “Hey, I might have a car purchase down the road and I don’t want to use financing and I want to take a big distribution.” Well, you take a big distribution from a pre-tax retirement account that might bump you up into the next bracket. That might be a time to where if you have some money in Roth where you might be able to do it.

So as you start thinking about why you might want to prioritize Roth, I mean, well, we listed out a handful here. I mean, there are a multitude of reasons of why you might want to look at a Roth and why it’s not just a kind of set it and forget about it thing each year. This is something that should probably be on your docket to maybe take a look at and say, how am I using the tax brackets that I’m in now? How am I using the retirement plans that are available to me and are you saving in the most effective way possible as you think about what your tax rate’s going to look like down the road? So many, many reasons to prioritize Roth. Just wanted to list out a few here.

Walter Storholt:

Yeah, that’s helpful. Have we arrived to the mega backdoor Roth?

Tyler Emrick:

We did. We did, because of course, there’s probably some listeners out there are like, “Well, okay, Tyler, that’s all fine and dandy, but I make quite a bit of money. I max out my 401(k). Maybe you’re doing this backdoor Roth option, and then you’re like, “Well, okay, I’ve used up all the Roth options that I have unless I want to start converting money,” and maybe you’re just not ready to convert money in a high tax bracket now. Well, this is where that mega backdoor Roth comes into play. Now, early in my career, I worked at a really big broker dealer that had quite a bit of retirement and employer retirement plans, and when I first started there, this idea of pre-tax and Roth contributions, really, I’d say Roth contributions wasn’t on every plan. Most employers really just gave you the ability to contribute pre-tax to your retirement plan.

Through them, of course, Roth contributions started to become more and more popular over the years, and now most plans have that Roth contribution. Now, when we found what we called at the time, really a golden plan was some of these retirement plans actually allowed individuals to do what’s called an after-tax contribution to the retirement plan, and almost 20 years ago now, those after-tax contributions when you found something like that that was written into those plan documents, that was finding gold, especially for individuals that could take advantage, and were already maxing out their contributions to their retirement plan because what this after-tax contribution allowed individuals to do is to contribute more than the max pre-tax or Roth contribution to their plan and actually put it into the retirement plan what’s called after-tax. Now after-tax essentially means that it goes into your retirement plan, but you do not get a tax deduction for, kind of sounds like Roth a little bit.

Walter Storholt:

It does. Yeah.

Tyler Emrick:

You don’t get a tax deduction when you do Roth, but the key difference is that after-tax money, any earnings that you had, those earnings would actually still be taxable to you. Whereas in a Roth, of course, Roth earnings are all tax-free. That’s the biggest benefit there. So some listeners might be like, “Okay, well that doesn’t sound all that great,” but there’s a quirky rule that actually allows you to take those after-tax contributions, not the growth but the contributions, and actually convert them over into a Roth without paying any tax on it, which of course then now you’ve got that money in a Roth and it’s growing. And of course there are no income limits on that. There are no conversion limits.

So some individuals that have been taken advantage of that over a number of years could have a pretty substantial amount of after-tax contributions into their retirement plans through their employer, and then when they retired or now actually the retirement plans will allow you to convert right inside of the plan and a lot of times just do it automatically. It was a big, big incentive and a big advantage for those individuals that were looking for another place to save and wanted to try to get as much money as they could eventually into a Roth. And thus, I don’t know how many years ago they started calling it a mega backdoor Roth, but the mega backdoor Roth was born, Walt, and now we get to talk about how cool mega backdoor Roths are and using the after-tax, but certainly I think that’s a big advantage as you start thinking about just Roth and how you could potentially get Roth in there that maybe is a little bit more less well-known. That certainly has gotten quite a bit of press over the last two handfuls of years or so.

Walter Storholt:

All great high-level information starting to get into some details, but I know that you are itching to get even further under the hood and into the weeds a little bit here. Right?

Tyler Emrick:

Yeah. Well, we’re finally getting to my whole premise of how I started talking about Roths and why I wanted to do a podcast on Roths.

Walter Storholt:

This is the moment. This is where we retire smarter. So this is where you take it to that next level.

Tyler Emrick:

It only took me three quarters of the podcast, but I finally got here. And as with most things, vault, right, the devil’s in the details. When you start thinking about a Roth, one of the important and most impactful planning strategies with a Roth is this idea of a Roth conversion. Now, again, real quickly, I know we covered it before, but that’s just, again, taking money that’s in pre-tax retirement accounts and actually moving it over into a Roth. So there are no income limits, there are no limit on how much of a conversion you can do. It’s purely up to you and your financial advisor and CPA to determine, well, how much of a Roth conversion is great. Now, in most years, what happens is those Roth conversions are typically completed at the end of the year, which I think sort of makes sense, right?

Walter Storholt:

Yeah.

Tyler Emrick:

Sometimes you might not know what your complete tax situation looks like, or you might not know what income might be coming your way over the course of the year. So you want to make sure that most of that has come in before you start taking your income up with a Roth conversion. Now, the TCJA, right? That Tax Cuts and Jobs Act, that’s the last tax legislation that was passed. That’s actually what’s sunsetting at the end of this year. And changing in that essentially eliminated this idea of recharacterizing a Roth conversion. So prior to this tax legislation, we actually used to do it the opposite. We actually used to convert money into a Roth early in the year because at the end of the year you could actually say, oops, I didn’t want to do that. I want to take that back. I want to lower the amount that I converted, and the IRS would actually allow you to do that and they called it a recharacterization. With the passing of the TCJA, that kind of changed things, and that’s what kind of pushed us to do these conversions later on in the year.

But the advantages of doing the conversion early in the year are pretty clear in my mind. If you think about it, in most years, the market does go up. That’s why we invest in stocks. Not every year, but certainly the numbers are in your favor, and the Roth has investments that actually grow tax-free inside of them. So while the earlier you do it in the year, the more opportunity that you have to have the numbers in your favor for that money inside the Roth to grow, and that growth would be tax-free as opposed to waiting toward the end of the year.

Well, those investments obviously were growing potentially, and while they grew in a pre-tax retirement account and go to Uncle Sam’s going to get his hands on that growth. So there’s a pretty clear advantage to doing that Roth conversion earlier on in the year. But there is some risks now because of course, you cannot re-characterize that Roth conversion. So once it’s converted, you’re stuck. So it could work against your favor too, right? You convert money into a Roth, and if that Roth money loses over the course of that year, well, you paid taxes on the higher converted amount, not that what’s inside your Roth at the end of the year.

So you kind of get a little bit of a double whammy there. But you kind of look at what we’ve experienced here to start out the year. I think the S&P 500 is down around 10% or so as we’re kind of recording this and you start thinking about if the market were to take another lay down or you start to think about, “Hey, I had an idea that I was going to do a Roth conversion this year. The question becomes is does it potentially make sense for you to do a partial conversion or convert a little earlier in the year?” So that way if you’re saying, “Hey, I’ll buy low, and then some of that potential growth over the course of the remainder year then would be tax free.” So that’s what we think now.

Walter Storholt:

It’s good to know that it’s a toothpaste situation, though. We can’t put it back in the tube once it’s out.

Tyler Emrick:

Out. Yeah, very, very, very important. Well, and I think if I could take it even one step further, it kind of opens up another can of worms, this idea of asset location and when you do a Roth conversion, what assets and investments are you actually converting over to the Roth? Are you converting interest bearing investments? Are you converting over stocks? What are the return expectations for those? Ideally, when we start thinking about your Roth account from a high level, you probably would want your more aggressive higher earning investments inside of there. Well, depending on what’s going on in the market, depending on the timing of your Roth conversion, the want of what you actually convert might change. And depending on your situation and what else that you have going on inside of your portfolio, I think taking a good look at all these things, well, hey, should I maybe convert a little bit earlier in this year?

Hey, what assets should I convert and how do I want to make sure this is my best use case? And you’re taking advantage of all those little nuances and all of the little granular implementation stuff that can add value over time if you’re a little more thoughtful just on, well, hey, I’m just going to convert this dollar amount each year at the end of the year in Roth, and it’s a random set of investments inside your accounts or whatever the case is. So, as always, we feel taking that more granular approach over time, you can stack the chips in your favor.

Walter Storholt:

All good points. Tyler, anything else we should know about these conversion opportunities at this point in time, this 2025 edition of this conversation, I suppose?

Tyler Emrick:

It is. Yeah. No, I mean, I think we hit the big ones. I mean, think if you’re sitting there listening and trying to digest, don’t lose sight of the first step is trying to get an understanding of, well, do you want to utilize a Roth? And to do that, you have to have a good understanding of, or at least an idea of, how your tax rate might change over time. That’s the great first step. And then from there, now we can get down into some of the more granular weeds on, well, how are you saving? Should you be doing Roth or pre-tax? Maybe should we be looking at these conversions? And if so, and if conversions on the plate, well, how do we be thoughtful with the implementation on that?

Walter Storholt:

All good points, Tyler. I can see though, where you can make some wrong turns here if you aren’t making these decisions with the end point in mind with a great plan in place. So it’s a good time to remind folks if you are going through this situation right now, considering Roth conversions, IRAs your various contribution levels, and trying to figure out that right mix, how to make the most tax advantage decisions. Don’t do that in a vacuum. Do that with the rest of your plan in mind, and you can get a plan in place by talking a little bit more in depth with the team.

At True Wealth Design, it’s really easy to get in touch with Tyler and Kevin and the rest of the folks at True Wealth Design. All you have to do is go to the website Truewealthdesign.com. We’ve got it linked in the description of today’s show. Click “Let’s Talk” on the website, and you can schedule your 20 minute discovery meeting with an experienced advisor on the team. It’s that easy to see if you’re a good fit to work with one another, what needles might be able to be moved and adjusted, what levers can be pulled to improve your financial situation and get you better prepared for retirement and other financial future items. All you have to do is go to Truewealthdesign.com and click the “Let’s Talk” button to schedule your visit. You can also call 855-TWD-PLAN, and that’ll put you in touch as well. Well, Tyler, I’m glad that spring is here for you and so much positivity and momentum going in the right direction, and I can’t wait to see what you have on the agenda for us next time to talk about.

Tyler Emrick:

Yeah, look forward to it.

Walter Storholt:

All right. Have a great rest of your week, and thanks for joining us, everybody. We’ll see you next time right back here on Retire Smarter with the team at True Wealth Design.

Speaker 1:

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