Episode 198 - CPA/Attorney Jim Lange on Roth IRA Conversions: Why and How They Can Benefit You and Your Family

What exactly is a Roth IRA conversion? What makes them such a big deal? Why would anyone in their right mind write the government a tax check before they had to? These questions and more will be answered tonight as top CPA/Attorney and IRA expert Jim Lange weighs in on the pro and cons, and the long-term and the short-term benefits of Roth IRA conversions. The fundamental distinctions between a traditional IRA and a Roth IRA is that the Roth IRA grows tax-free vs. tax deferred and there are no required minimum distributions (RMD) for the Roth owner or the owner’s spouse after the owner dies. If a Roth IRA is left to a child or grandchild, the income tax-free growth could potentially be measured in the millions, making them one of the most important and powerful tools in estate and retirement planning. The sticking point for many people is that you must pay income taxes up-front on the amount you convert from your traditional IRA to the Roth. Tonight, Jim will help listeners over this barrier giving people an exciting entré into the world of tax-free growth. Jim will include personal anecdotes that illustrate how valuable a Roth IRA conversion can be – including one story that shows it’s truly never too late to do one. Over the course of this episode, you will learn: • How to think about your IRA in terms of purchasing power vs. total dollars and why that is so important. • Why, contrary to what you might have heard, you are never too old for a Roth IRA conversion. • Whether you would be a suitable candidate for a Roth conversion. • When is the optimal time to make the conversion? • How to determine how much to convert? • Why making a series of conversions over a period of years is a smart move for tax purposes. • How to adjust your Roth IRA conversion plan over the long term, as tax laws and/or your personal situation changes. • How future tax increases might affect your accounts. • Why Roth IRAs are so valuable to your heirs. You can listen to the MP3 of this episode by going to http://paytaxeslater.com/radioshow/langemoneyhour_198.mp3