Stock Market Window of Opportunity

Key Takeaways

• Execute Roth IRA conversions during market downturns when asset values are depressed—converting a $100,000 investment that drops 34% then recovers to $186,000 means all that $86,000 growth is permanently tax-free
• Implement a staged conversion plan over multiple years (or even multiple times within one year) to minimize tax impact, rather than converting all at once, taking advantage of current tax rates through 2025
• Target underperforming equity investments within your IRA for conversion first, as these have the greatest probability of future appreciation and thus offer the most tax-free growth potential
• Starting Roth conversions in your 40s-50s, rather than waiting until age 72, avoids paying taxes on significantly inflated asset values that may have doubled, tripled, or quadrupled
• Staged Roth conversions reduce required minimum distributions at age 72, which lowers Medicare Part B and D premiums and reduces tax burden on non-spouse beneficiaries inheriting your accounts