Do These 8 Things BEFORE You Roth Convert

So we're gonna start off more simple and then we're gonna get to more advanced.

So one of the first things you should do before doing a Roth conversion, in my opinion, is making sure you're contributing to a Roth Now, contributing to a Roth IRA, you may or may not be able to.

So maybe you can't, no problem, move on to point number two.

But a Roth IRA can be contributed to if you have earned income, if your income isn't too high.

But remember, there's only so much you can contribute to a Roth IRA each year.

But that's one of my favorite ways to get in money to a Roth.

And I like to try to maximize that availability each year.

So if you have extra cash in your bank, bank account or maybe you have a brokerage account that you're paying capital gains tax on, a great way to reposition those assets instead of paying capital gains, instead of paying taxable interest on the growth in your bank account, move it to a Roth IRA where that growth can be tax-free and have the flexibility of no requirement distributions in the future, no calculation towards your Medicare premiums, no security taxes, all the things that are important to plan for.

Now, the second thing you should do before a Roth conversion, again, not for everyone, is to look at maximizing your Roth employer account.

Again, not for everyone, because if you're already retired, you can't do one, you can't do number two either.

And so this is gonna be for those that are still working and also just like point one, have the extra cashflow, the extra liquidity to be able to fund a Roth 401k.

Now, a Roth 401k, you can fund much more, TSP, 457, whatever it may be, you have higher limits And if you're 60 to 63, you have higher amounts that you can put in there as well.

And so you wanna make sure you're doing the catch up for that, but also anyone that's older as well can look at doing the catch up in addition to the amount that you're able to give to your 401k or to your employer sponsored plan each year.

And this one, unlike the Roth, there is no income limit.

So if you make a million dollars a year, I know that's not the case with most of our clients with pensions.

Most of you have never made a million dollars a year, but you've been very diligent, hardworking, frugal.

We call you guys a Midwestern millionaire, even though you're not from the Midwest.

And so congratulations if you're in that spot and having this conversation of having a million or more and a pension, but make sure you're looking to maximize these opportunities now as well.

And so point number one and two are great ways to what I call shovel money into the Roth.

Now, a Roth conversion could be considered a dump truck, right? We'll get into that as we go, but shoveling money is good as well.

It all helps get us to optimizing our situation.