Wed Oct 30 2024, by Tyler Gardner

Why You Should Think Twice Before a Roth Conversion After 50

I'm Tyler, a former financial advisor and portfolio manager, and now I create free financial content to help you navigate your financial journey without the costs.

Reasons Against a Roth Conversion After 50

1. High Tax Bracket Concerns
Odds are I'm currently in a relatively high tax bracket, so I'm not quite sure why I'd take the tax hit now to avoid a potential tax hit at retirement when I might be in a lower tax bracket.

2. Established Retirement Accounts
If I'm in my 50s, hopefully by this point I've established a relatively healthy 401k or traditional IRA. Compounding growth is crucial, and converting means liquidating my assets and then reinvesting. Not the end of the world, but you never know which days you're going to be out of the market and regret that you are.

3. Limited Compounding Time
Unless I'm planning on making this account a legacy for my children—which can be great for estate planning given there are no required minimum distributions on a Roth IRA—there’s not much time left for this account to compound. Why would I bother with steps one or two if I'm not anticipating a substantial reward? After 50, the potential reward for a Roth conversion begins to dwindle.

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