Episode 41: Discounted Roth Conversions: Using a Down Market to Your Advantage

I believe that Roth IRAs are the best place for a small business owner’s retirement nest egg. And this year’s bear market has just put them on sale for you. In other words, the decline in the stock market means that account values for traditional pretax accounts like IRAs and 401(k)s will likely be lower. In most cases, when the value of assets like stocks and bonds fall, the taxes on conversions to Roth IRAs often drop as well. Meanwhile, there’s greater potential for future asset growth and withdrawals that are tax free. Indeed, these are two primary benefits of discounted Roth conversions.

But for discounted Roth conversions to make sense, the potential benefits must outweigh the cost.

So in this episode, I’m going to dig into what Roth conversions involve, why a small business owner may want to consider a Roth conversion, and the potential pitfalls of this tax planning strategy.