{"version":1,"type":"rich","provider_name":"Libsyn","provider_url":"https:\/\/www.libsyn.com","height":90,"width":600,"title":"The 5 Most Common Objections to Roth Conversions (and Why They\u2019re Wrong)","description":"David McKnight unpacks the five most common objections to Roth conversions and why they simply don\u2019t hold up under scrutiny.  The first objection has to do with people not wanting to voluntarily pay taxes before the IRS requires them to. While on the surface, postponing this may sound logical, it ignores a fundamental aspect: the state of the U.S. national debt. It has just passed $39 trillion, and it\u2019s slated to grow by $2 trillion per year for the next 10 years, and $3 trillion after that. In other words, interest on the national debt is becoming one of the largest line items in the federal budget.  That means that by refusing to pay taxes today, you\u2019re making an insanely risky bet that taxes in the future will be lower than they are right now. All, while your IRA keeps growing and compounding over time. Thus, 10 years from now, not only could tax rates be higher, but your required minimum distributions could be dramatically larger. The second most common objection to Roth conversions revolves around people saying, \u201cIf I do Roth conversions, that additional income will force me to pay increasingly higher levels of IRMAA or cause my Social Security to be taxed.\u201d David points out that Roth conversions do increase your taxable income, which can trigger those additional expenses during the conversion period.  However, while it\u2019s true that you\u2019ll pay IRMAA and Social Security taxation in the short term, you\u2019ll get rid of those additional expenses for the rest of your life once your conversion period is over. Objection #3 is \u201cThere\u2019s too much opportunity cost, I won\u2019t have time to make up for the taxes I paid\u201d.  David explains that, despite sounding sophisticated, this objection is based on a flawed premise. Your IRA is a \u201cbusiness partnership\u201d with the IRS \u2013 and every year they get to vote on what percentage of your profits they get to keep. So, when you do a Roth conversion, you\u2019re not losing money. You\u2019re simply buying out your \u201csilent business partner\u201d at today\u2019s historically low tax rates. David highlights that, if taxes double in the future, you\u2019ll be glad you bought them out while taxes were still on sale. The fourth objection \u2013 \u201cIn retirement, I\u2019ll be in a lower tax bracket\u201d \u2013 is actually one of the most dangerous assumptions in all of retirement planning. People assume that when they retire, their taxes automatically go down. For many Americans, the exact opposite happens, though. Once required minimum distributions kick in, they can force huge amounts of taxable income onto your tax returns. David touches upon an additional issue almost nobody talks about: the so-called widow\u2019s penalty. The fifth objection to Roth conversions revolves around the question, \u201cWon\u2019t the federal government tax Roth IRAs sometime down the road?\u201d People don\u2019t realize that the government loves Roth IRAs because they generate tax revenue today \u2013 unlike traditional IRAs, which delay tax revenue. That\u2019s why, every time Congress needs money, they tend to pass legislation that makes Roth accounts even more attractive. Remember: Roth conversions are about taking advantage of the tax sale of a lifetime before catastrophic levels of debt force tax rates higher.     Mentioned in this episode: David\u2019s new book: The Secret Order of Millionaires David\u2019s national bestselling book: The Guru Gap: How America\u2019s Financial Gurus Are Leading You Astray, and How to Get Back on Track Tax-Free Income for Life: A Step-by-Step Plan for a Secure Retirement by David McKnight DavidMcKnight.com DavidMcKnightBooks.com PowerOfZero.com (free video series) @mcknightandco on Twitter  @davidcmcknight on Instagram David McKnight on YouTube Get David's Tax-free Tool Kit at taxfreetoolkit.com ","author_name":"The Power Of Zero Show","author_url":"http:\/\/davidmcknight.com\/","html":"