Jim Lorenzen, CFP®, AIF®
Steven Elwell, a CFP® practitioner in Amherst, NY recently wrote a nice piece for NerdWallet on this subject.
In his piece, he mentions five situations that might suggest a conversion would be a good move:
If you’d like to read Steve’s article, you can access it here.
The points worth noting in particular – my own opinion – are #1 and #4.
Tax brackets are historically low. There was once a time when the highest marginal bracket was 90% before the early 60’s, when President Kennedy began to initiate cuts. As you can see from the chart below, the general trend has been down for some time, although it’s also worth noting a lot of deductions have disappeared along the way.
While top marginal tax rates have declined, it’s also true that the Government is still spending your money – usually favoring whatever groups will help them get re-elected – I know, I’m a cynic. Nevertheless, as I take great pains to avoid any mention of Greece, the government keeps spending. While those in office take pains to point out the annual deficits have been in decline, the fact is those deficits still add to the existing debt.
Not long ago I did a webinar entitled How To Plan for an Income Tax-Free Retirement. A number of those who attended, and a few who couldn’t make it, have asked me if I had a written report they could download. I’ve created an updated version outliining this strategy, which is really most worthwhile for those who are successful and most likely between ages 35-55. Those between 55 and 60 may still benefit. You can learn more here.