Seminar idea - Higher Tax/Interest Rates
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Like I said, I ran a spreadsheet that shows how it makes sense for some people. But you know, the vast majority of people, it may not make sense for. Nobody really wants to pay taxes.
I think the “Roth Conversion” is more of a marketing ploy to get people in the door. You have the conversation, and while you do, you make some other recommendations, solidify the relationship, and then bring in the next “Roth converter”.
Agreed. I've only converted 2 so far this year. One is a guy retiring this year, just put converted $100k to have a tax-free bucket...total investments are $1.6mm. The other was a younger guy with a smaller IRA that just wanted tax-free growth. Other than that, it's all about marketing.Like I said, I ran a spreadsheet that shows how it makes sense for some people. But you know, the vast majority of people, it may not make sense for. Nobody really wants to pay taxes.
I think the “Roth Conversion” is more of a marketing ploy to get people in the door. You have the conversation, and while you do, you make some other recommendations, solidify the relationship, and then bring in the next “Roth converter”.
RE: spreading taxes vs paying in 2010, if you have the cash.
Too much of a blanket statement to say pay now vs pay later. It depends on how far tax brackets creep up. If the marginal bracket goes up by 1-2%, for example, you should be able to generate more interest on than money by hanging onto it yourself and sticking it in muni fund...as opposed to forking it over to the government.Assuming 6% growth, pay taxes out of pocket, tax brackets stay same/increase, the break even point on convert vs. don’t is at about 12 years. It becomes meaningful at 15+.
If there's a pool of money your client knows they won't need for at least 15 years, there's a very compelling reason to convert. If they're HNW/UHNW, also consider building in a gifting strategy (Charitable remainder trust?) in the year the conversion taxes would normally hit. If they don't want an irrevocable gift to compromise their legacy plan, use a portion of the CRT income to buy life insurance.