Craig Wear explains Roth conversions: moving money from a traditional IRA or 401(k) into a Roth, paying taxes now so it grows tax-free forever with no required withdrawals. Federal tax rates are historically low right now, making today's tax bill predictable versus uncertain future rates.
Let's start by making Roth conversions incredibly simple. A Roth conversion is just moving money from a tax deferred account into a tax free account. That's it. You pay the tax now, and once the money is in the Roth, it grows tax free for the rest of your life. No requirement of distributions, no taxes when you take it out. And for many of you, no taxes for your heirs either. The reason Roth conversions matter so much right now is really simple. Tax rates are historically low, standard deductions are higher, and we actually know what today's tax bill looks like. The future? That's a guess. This is about choosing certainty over uncertainty.
