There's an uptick in Roth conversions in 2024, according to Fidelity Investments. Here's how to know if the strategy is right for your portfolio.
There was a 44% year-over-year increase in the number of Roth conversions during the first quarter of 2024, according to Fidelity Investments.
But "it isn't a slam dunk for everyone," because of the upfront tax bill, according to Marianela Collado, a certified financial planner, certified public accountant and CEO of Tobias Financial Advisors.There was a 44% year-over-year increase in the number of Roth conversions during the first quarter of 2024, according to data from Fidelity Investments.
You'll also need to weigh how the additional income during the year of the conversion impacts eligibility for certain tax breaks. Higher earnings can also trigger income-related monthly adjustment amounts, or IRMAA, forand Part D premiums down the line. The best time for a Roth conversion Roth conversions are also more popular during lower-income years because you'll owe less upfront taxes on the converted balance. Key opportunities could include after a job layoff or early in retirement before you claim Social Security and start taking so-called"Nobody likes paying taxes if they don't need to," he added.Many baby boomers have a sizable pretax retirement balance because after-tax Roth accounts weren't available early in their careers, experts say.
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