Four Reasons to Consider A Roth IRA

Key Takeaways

• Convert strategically by filling tax brackets rather than converting your entire IRA at once—you can systematically convert over multiple years or move just enough to stay below the next tax bracket to minimize your annual tax hit
• Take advantage of 2020's depressed market valuations by converting specific underperforming assets in-kind from your traditional IRA to a Roth, locking in lower valuations before they rebound
• If you normally take required minimum distributions, use the CARES Act waiver to skip 2020's RMD but voluntarily take that distribution amount and convert it to a Roth to reduce future tax burden
• Consider partial Roth conversions now to reduce your heirs' tax liability, since the SECURE Act eliminated the ability to stretch inherited IRAs over their lifetimes—non-spouse heirs must now distribute accounts within 10 years
• Begin Roth conversions early in the year rather than waiting until December when financial institutions are overwhelmed, unless you're using a bracket-filling strategy that requires knowing your full-year tax situation