Roth Conversions: Why You Might Consider Converting to a Roth IRA

July 21, 2021

A roth conversion is a process of converting savings from a tax-deferred retirement account like IRAs or 401k accounts to a ROTH IRA. Roth conversions can be advantageous because the converted money grows tax-free, and all distributions can be taken out completely free of taxes. With tax law changes approaching in the coming years and the tax implications they have on retirement accounts for many people, the idea of converting money from a tax-deferred account to a tax-free account to potentially lower tax liabilities is becoming more and more appealing. This blog post discusses why you might consider doing this type of conversion, who should consider it, and the benefits and disadvantages that come with it.

Advantages of ROTH Conversions

Converting to a roth IRA can help when you feel that future tax law changes can place you in a position where you might be paying more taxes in the future than you are now. Where do you think taxes will be in the future? Do you think taxes will go up? Or down? If you know your tax liabilities today are lower than they will be in the future, you may want to consider a conversion. After a conversion of tax-deferred money to a tax-free account, those distributions come out of the account completely free of taxes, which means that you won’t have any additional liability in the future because all your money will be taxed once at a lower tax rate–thus avoiding potential future income taxes at higher tax rates for retirees.
Roth IRAs are also advantageous for people with a low income and high retirement savings. By paying taxes before contributing to a Roth account, you’ll be able to let that money grow tax free and withdraw it tax free – potentially avoiding a higher tax liability on that money.

Disadvantage of ROTH Conversions

A key disadvantage of a roth conversion is converting the tax-deferred money as it can create a taxable event. And for some people, a roth IRA may not be the best saving strategy. Consider your financial goals and your financial plan to determine the best mix of retirement tools for you.
Before converting money to a roth account, investors should consult with a financial advisor to create a tax strategy in converting the funds to avoid bumping up against one’s tax liabilities and paying unnecessary taxes due to the conversion.

If you don’t have a financial advisor and you have more questions about roth conversions, you can set up a complimentary consultation meeting here.

We have experienced financial advisors who often help people convert money to roth accounts.

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This content is provided for informational purposes only and is not intended to serve as the basis for financial decisions. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives.

A Roth Conversion is a taxable event and may have several tax related consequences. Be sure to consult with a qualified tax advisor before making any decisions regarding your IRA.


Our firm is not permitted to offer tax or legal advice. Individuals are encouraged to consult with a qualified professional before making any decisions about their personal situation.


Securities offered only by duly registered individuals through Madison Avenue Securities, LLC (MAS), member FINRA/SIPC. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM), a Registered Investment Adviser. MAS and E.A. Buck Financial Services are not affiliated entities. AEWM and E.A. Buck Financial Services are not affiliated entities. 977148- 7/21.

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