Craig Wear compares Roth conversions to The Amazing Race: rushing through without a plan leaves money on the table, while pacing yourself and mapping out steps reduces your IRA balance efficiently and cuts future tax bills. Hasty conversions increase required minimum distributions and waste long-term savings.
Let's say you and your spouse or partner are contestants on The Amazing Race, where you have to travel to a location, complete a task, and then you get to the final destination as fast as possible and you compete against other people. There's two ways that we watch people approach the race. Some teams hear the task and the destination and they rush off to try to get there. And that's how a lot of people treat Roth conversions. They know their objective is to reduce their IRA balance to prevent future RMDs. But in The Amazing Race, oftentimes the fastest team doesn't always get to the destination first. Every time they rush, the task and they miss the steps and then they argue about the directions and the detours and it delays them from really getting to the destination. So when that happens with your Roth conversion, it doesn't just end up costing you time, it costs you money too because your future tax liability is just going to keep growing. But teams with older contestants, it's interesting, handle that race a little differently. They pace themselves and they figure out the best way to get there and to get where they're going. And while the opposition rushes to the nearest airport in 10 minutes, gets stuck with 3-hour layover, and then they're on a 40-minute bus ride to a totally different airport. Airport with a direct flight and they're delayed. And if your conversion plan doesn't get you to the destination, then your plan and even your conversions won't actually save you much money in the long run.
