In this video, Craig Wear, CFP®, explains why delaying Roth IRA conversions can cost investors significant tax savings. He begins by acknowledging common, reasonable reasons people postpone conversions—market uncertainty, coordination with a CPA, spouse involvement, etc.—but then quantifies the hidden price of waiting. Drawing on research from thousands of conversion plans, he shows that a well‑executed conversion can generate about $1.8 million in lifetime tax savings, while a one‑year delay reduces that to roughly $1.7 million (a $66,000 loss) and a five‑year delay cuts savings to $1.4 million (a $357,000 loss). He outlines the five essential components of a successful conversion plan: CPA coordination, investment‑advisor input on which holdings to convert, estate‑attorney review, spouse alignment, and optimal timing based on market and tax conditions. Each component requires lead time, and compressing the execution window erodes value. Wear emphasizes that delayed conversions allow the IRA to keep growing taxable dollars, increasing the IRS’s share over decades. He urges viewers to calculate their own numbers using an RMD calculator linked in the description, stressing that the best time to start was five years ago, and the next best time is now. The video ends with a call to subscribe for deeper conversion plan walkthroughs.
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You already know Roth conversions make sense. You've probably been thinking about it for a while. Maybe you even started, but if you're like most people I talk to, there's a part of you that's been telling yourself, eh, I'll get serious about this either at the end of the year or next year after the market settles or after I talk to my CPA or after things feel a little more certain. I get it. I mean, it feels like a decision you can make later. What I want to show you today is what later actually costs you. Not in theory, not as a principle, in real dollars from real conversion plans that we've done. Look, we've studied thousands of these, and the numbers that came out of that research stopped me cold the first time I saw it. And by the end of the video, you're going to know exactly what waiting costs, and I promise you, you're not going to think about it the same way again. So let me start by saying something I mean very sincerely. The reasons people wait on this are not crazy. They're actually pretty reasonable, pretty logical. The markets feel uncertain. You're not sure which accounts to touch first. Maybe you want to get your CPA involved, but tax season just ended and you don't want to bother them. Or maybe your spouse isn't fully up to speed yet, or on board and it feels like just one of those things that needs a little more runway and time to breathe before you pull the trigger. Those aren't irrational reasons and I've heard every one of them multiple times over in different shades and I understand every single one of them, but here's the problem. Waiting has a price tag, a very specific one. And most people have never seen the numbers. So that's what we're going to do today. So we've looked at thousands of conversion plans, how they were built, when they started, what they produced, and we calculated exactly what delay costs those people year by year in actual dollars. Let me show you what we found. Before we get to the numbers, I want to make sure you understand something about how a Roth conversion actually works when it's done well. Because this isn't a single transaction. It's not something you do in an afternoon in December and call it good. A conversion done well is a result of 5 things coming together, and each one of them has its own lead time. Here's what's actually at work behind a well-built plan. First, your tax preparer or CPA. Tax prep season runs February through April, and if you want to coordinate estimated payments, withholding amounts, and conversion timing properly, you need your CPA before they're buried in filings. Miss that window and you're looking at next year. Second, your investment advisor. You need to know which specific holdings you convert because that matters a lot. Identifying the right ones takes real evaluation across your portfolio. It's not a decision you want to just rush into the last few weeks of the year or just take a certain percentage of the total and move it over. Third, your estate attorney. Here's one most people don't even think about. Converting changes the character of your assets from pre-tax to post-tax, or I should say tax-free. That affects how your heirs actually inherit it. And it may mean no difference and no change at all, but it could mean that your existing estate documents no longer say what you think they say. And we like to tell people their attorney needs to be in the loop. Fourth, pretty important, your spouse. This strategy affects both of you, including what happens to the remaining spouse if somebody passes first. The sooner your spouse is fully in the picture, not just aware, but genuinely part of it, the more confidently the whole thing gets executed immediately. I've seen more plans stall because of a spouse who wasn't in the room than for almost almost any other reason. And fifth, conversion timing. The right moment to convert isn't automatically December, and yet that's when most people do it. It should be when market conditions and your tax positioning actually align. That opportunity only exists when you have more of the year rather than less of the year to monitor and to take action on it. And if you're scrambling at the end of the year, that window is already mostly closed and your opportunities get compressed immediately. So each of these takes time. And here's the thing, compressing that The window doesn't compress the plan. The plan can still be excellent. What gets compressed is the execution window. And execution is where the value actually lives. Having a plan is nothing. Implementing it and doing something with it is where it lives. Our research shows that conversions executed with more of a planning year, meaning proper coordination, the right timing, strategic investment selection, can add as much as $30,000 of value for every $1 million in the Roth converted. That's not a small number, and it's not because the plan itself changed. It's because everything around it had time to work. You gave yourself the opportunity to be in a position of winning on this deal. Okay, so here's what you came for. We're going to look at a real sample plan. The numbers I'm about to show you are for illustrative purposes. Your situation is going to be different. Every plan is different, but the direction is the same across thousands of cases. So pay attention to the shape of this, not just the specific figures. In this plan, a well-executed Roth conversion strategy started now with a full planning year, properly coordinated, produces lifetime tax savings of roughly $1.8 million. Okay, so we're going to call that the baseline. That's what acting looks like. Now, let's look at what waiting looks like. If this person waited 1 year, 1 tax year, so they waited from the middle of the year to January for whatever good logical reason they have, their lifetime tax savings drops to $1.7 million and some change. So, What's the cost of that one year? $66,000. I want you to sit with that for just a second. $66,000 of tax benefit that they could have had that they will never have an opportunity to get before. Not because the plan got worse, not because anything went wrong, simply because the window was now one year narrower. Let's look at maybe this person waited 5 years and often we have people say to us, well, I'm going to be retiring in several years and so I'm going to be in a whole lot lower tax bracket then. I'll just wait until then or whatever their reason is for waiting. Right? But we hear a lot of it. We hear a lot of excuses. Lifetime tax savings in that case drops to $1.4 million. So the cost of waiting over 5 years then? $357,000 just because they waited. That's the price of 5 years of, eh, I'll get to it, or I'll handle it next year, or I'll wait till things are more certain, or I'll wait till I'm in a lower tax bracket. And here's what makes that number so significant. That money doesn't disappear into thin air. It just stays in the pockets of the IRS. Comes directly out of what your family would have kept. Now that's exposed and is no longer protected. This also comes out of what your spouse has if something happens to you, out of what your kids inherit. It's not an abstract number. That's real money that either stays in your family or it doesn't. Here's the part that surprises most people. You already understand compounding. You've lived it and it's how you've built what you have. Every year your IRA grew and then it grew on the growth and then it grew on that and over 30 or 40 years that turned into real wealth. That same force is now going to work against you. Every dollar sitting in that IRA is going to be taxed. At ordinary income tax rates. That's not a maybe. That's the deal you made when you made the contribution. The question is only when and on what amount are you going to pay taxes? And while you're deciding, the account keeps growing. Every dollar growth is a dollar the IRS gets a larger piece of. The account that looks good on your statement, a meaningful portion of it isn't even yours. I had a client, really sharp guy, managed his own money for 30+ years. He put it better than I ever have. He looked at his account balance and he said, well, Craig, it looks good to look at your spreadsheet and say, I got all this money. But then you have to stop and say, eh, it's not all all my money. There's a big chunk of it that Uncle Sam still has rights to. And that's exactly right. The longer it sits there, the larger their share becomes. The window to change that's open right now, but it's not going to stay open forever. So look, the numbers I showed you today came from a sample plan. Your numbers are going to be different. Your IRA balances is different. Your timeline's different. Your other income is different. Your tax situation is different, but the direction is the same. Every year of delay has a cost. The question is what that cost looks like for your specific situation. And the place to start is by knowing your number. We built an RMD calculator that shows you exactly what your IRA is projected to become and what the government will force out of it starting at age 73 if nothing changes. Most people who run this number are shocked. Some are genuinely surprised, but either way, you'll know what you're actually dealing with and you can't build a real plan until you do. The link is in the description. It takes about 2 minutes. So go run your number. The video's over, but look, the best time to start this was 5 years ago. The second best time to start it is before another month goes by. If you want to see what a real conversion plan looks like, not the theory, the actual math, make sure you're subscribed to the channel because that's exactly what we cover here. I'll see you in the next video. Take care.
