5 Huge Roth Conversion Mistakes To Avoid

2025-02-17

In this episode of The Roth Guy, Jude breaks down five crucial Roth conversion mistakes that could derail your retirement strategy. For example, many investors rush into conversions without considering the tax implications, often converting too much in a single year and inadvertently pushing themselves into a higher tax bracket. Jude explains how this mistake can trigger a "domino effect," leading to unexpected costs like increased Medicare premiums due to IRMAA surcharges. We also discuss why paying conversion taxes from the wrong account can reduce...

In this episode of The Roth Guy, Jude breaks down five crucial Roth conversion mistakes that could derail your retirement strategy. For example, many investors rush into conversions without considering the tax implications, often converting too much in a single year and inadvertently pushing themselves into a higher tax bracket. Jude explains how this mistake can trigger a "domino effect," leading to unexpected costs like increased Medicare premiums due to IRMAA surcharges.

We also discuss why paying conversion taxes from the wrong account can reduce long-term growth and how misunderstanding the five-year rule could result in penalties if funds are withdrawn too soon. Beyond these key mistakes, we’ll discuss the importance of having a well-planned tax strategy to make Roth conversions as effective as possible.

Here’s some of what we discuss in this episode:

0:00 – Intro

0:53 – Converting too much in a year

4:14 – Impact on Medicare premiums

6:22 – Funding Roth conversions

7:47 – The five-year rule

8:47 – Having an overall tax strategy

Resources for this episode:

Tax management journey document

https://drive.google.com/file/d/1SlEkVuxijRceUcTnkzdqggs2_ATNrBrZ/view?usp=sharing

The Tax Bomb website

https://thetaxbomb.com/