Episode 419: The Roth Conversion Math Almost Everyone Gets Wrong

Thinking about doing a Roth Conversion? Beware: many people compare the wrong tax rates… a mistake that can lead to the wrong decision in retirement. Join David McKnight to learn which of the two numbers you should be comparing instead and when paying the IRS today makes sense, and when it doesn't.  In this episode, David McKnight explains why a lot of people get the math wrong when deciding on a Roth conversion (hint: they compare the wrong tax rates). The common approach is to compare your tax bracket today with the bracket you expect in retirement, but David says that comparison can lead you to the wrong decision. David shares an example of a married couple filing jointly and who are considering a $200,000 Roth conversion. Before converting, their job, interest, dividends,and rental income already fill their standard deduction. Moreover, people also make the opposite mistake on the retirement side, using their highest marginal bracket as the rate on all their IRA withdrawa...