Craig Wear explains why a DIY Roth conversion plan that matches professional fees might still cost more in taxes over time. Conservative conversions keep you under a tax bracket each year, but aggressive upfront conversions leave more pretax money to grow, reducing RMDs and lifetime tax liability in retirement.
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 growth, your account enters RMD years with a larger balance. That makes 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.
