Craig Wear explains how Roth conversions add taxable income that can push you into a higher tax bracket. He says don't let that scare you off: for the right person, paying more taxes now to lock in tax-free growth later is worth it.
But generally speaking, part of what we want to do is to understand that you do have a tax liability when you do a Roth conversion, and that taxable amount of that is generally. It is the amount of the conversion. So if you do $100,000 Roth conversion, that's an additional $100,000 of taxable income. And that could cause you to actually go to a higher tax bracket for some or all of that that you need to be aware of. I wouldn't let that scare you away. We've learned over time that if you're really a good candidate for Roth conversions, you're better off to get to a higher tax bracket. It's kind of like pulling the band aid off.
