Craig Wear and two speakers debate whether paying for a professional Roth conversion plan beats doing it yourself. A conservative DIY approach converts only up to your current tax bracket each year, but leaves a larger IRA that generates bigger required minimum distributions and higher taxes later. They built an RMD calculator using data from 3,000 clients to show lifetime tax impact and potential savings from well-timed conversions.
Chapters
Here's another response that we hear often from people managing their own plan. If a professional plan is only marginally better, and then I have to pay thousands in fees, isn't that DIY still better?
That's reasonable. And then if the results are nearly identical, keep your fee, don't pay anybody.
So then how do I know if my plan is close enough?
Oh, so how do you know it's even close at all? So you're converting before RMDs and using low-income years. That's sensible, but here's maybe what's missing. Imagine your One plan converts very cautiously, and for example, you just convert up to the top of your tax bracket every year. That bill feels conservative, it stays comfortable, and the traditional IRA comes down a little each year. But another plan converts more aggressively while the household still has room to do it. So during the first year, the main difference is obvious. The second plan pays more tax.
Which makes my plan at least look better.
Today, yes, but then the money left behind in each IRA keeps growing, right? Because you left more money exposed to your account enters RMD years with a larger balance. That make sense?
Yeah. And that leads to higher RMDs, which leads to more taxes.
Yeah, exactly. And those distributions continue generating tax long after the sting of that professional fee has faded.
So while I can know exactly how much I spend in fees, I don't necessarily know what decision is costing me elsewhere.
Right. It's kind of like an old truck driver that I used to know used to say, the scariest thing in the world is that you just don't know what you don't know. But that changes the comparison. The question is not, do I pay a fee or avoid a fee? It's what does the DIY plan produce for me? And then what does the stronger alternative produce? And after accounting for the fee, which one reduces the tax burden the most?
So avoiding the fee is only a real advantage once I know the size of that gap.
Exactly. And that's why our RMD calculator uses the data from our client database. So you can put in your numbers, get a realistic projection based on what we've actually achieved for our clients. And if the potential tax savings there are much stronger than what your DIY plan looks to save you, well, then it might be worth paying the fee.
Hey, if you've got $1 million or more in your IRAs, the IRS already has scheduled one of the biggest tax bills of your entire lifetime. It starts at 73 or 75 years old. The problem is most people just haven't seen the number yet. We have an RMD calculator that we've put together that'll give you an idea what the taxes are going to be over your lifetime, as well as maybe what's going to be left for your heirs. If you leave it all to them. We've taken it a step further and we've cross-referenced that to people just like you that have been clients of ours, of over 3,000 of our clients. And we want to be able to give you an idea of what's possible for you to save if you get Roth conversions done right. So click the link below. It'll take you about 2 minutes and it'll be pretty alarming.
