The theme this week on the Retirement Quick Tips Podcast is: Does It Matter When You Convert To a Roth IRA or 401k? 

Today, I’m talking about the worst times to convert during the year. 

End of year is when most people convert to a Roth - they know more about their tax situation, but in most years when you have a gain by the end of the year, you’re not making a big enough dent in your IRA. 

Example: converting $100,000 of a $1,000,000 IRA at the end of the year. If the IRA grew by 8% that year, the new value is 1,080,000, so they $100,000 conversion at the end of the year only reduces your IRA balance down by only $20,000, because most of what you converted was the growth from that year. 

As long as your account is growing in a given year, you’re always behind and not really making a dent in your IRA balance. 

Not sure if a Roth conversion is right for you? I’ll run the numbers for you to help you decide if a Roth conversion makes sense for you. Just email me your age, the $ amount you want to convert, and your expected income for 2022, and I will send you a personalized Roth conversion analysis and help you interpret the results. 

Just send me an email - [email protected] - again with your age, the $ amount you want to convert to Roth, and your 2022 expected income. That’s [email protected]

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance