Now a Good Time to do Roth Conversion?

[SoReadyToRetire]

It was part of my financial plan to do a partial conversion from IRA to Roth in 2020.

Is it a good time to do that Roth conversion *now*, while the market is down, instead of waiting until the end of the calendar year as had been planned?

I have bunch of cash sitting in my IRA right now, since I just retired on 2/7 and rolled my old 401k over into it--those funds transferred right in the middle of last week's carnage.

Seems to make sense to do the Roth conversion now, so I'll reap the biggest gains from future recovery *inside* of the Roth (maybe by buying an ETF in the Roth)--or am I missing something?

TIA.

 

[Ronstar]

I don’t think that you’re missing something. It makes sense to me to do Roth conversions during the time of the year when the price per share of the securities being converted is at its least. But I’m not sure that we’ve reached the bottom of 2020.

 

[Sunset]

I have done about 1/5 of our planned amount.
Just doing a transfer of shares instead of selling in one, waiting and buying in the other.

Did it now, as don't know if this is the bottom or not, but getting 10% off taxable amount is nice

 

[Rianne]

We're waiting until 2022 when we're both 65. Tax rates remain lower (?) 2025. We're on ACA and DH has nice part time consulting gig that brings in ~ $45K.

 

[Retireby45ish]

Can you do a conversion from 401k right to a Roth or do you need to go 401k to (create a new) IRA to Roth?

 

[LRDave]

Can you do a conversion from 401k right to a Roth or do you need to go 401k to (create a new) IRA to Roth?

I have found this to be very dependent on the rules and general set up of your 401(k) plan. Fidelity admins my 401(k) via NetBenefits. I could not do it online. I had to call.

I can easily do it online through Fidelity for my IRA.

 

[CRLLS]

Is it a good time to do that Roth conversion *now*, while the market is down, instead of waiting until the end of the calendar year as had been planned?

This is a good time to Roth Convert, but tomorrow may be a better time. or maybe next week? It is like trying to time the market IMO. I have never been accused of being a market timer. That being said, I'm waiting for deeper cuts before I do this year's conversion. Maybe I will do it soon, or maybe the market will rebound and I will do it in December. Who really knows? Either way, the dollar amount converted will be the same. Only the percentage will change

 

[Lcountz]

I did some of my planned amount for 2020 last week, and have some left to do later in the year....

I've missed opportunities in the past, so took advantage this time....

Who knows? All I know is I HAVE to convert ( I'm 64) as much as possible while rates are this low....I may even convert MORE than I was planning to during a low period,because...

This too (market drop) shall pass. When I start to panic...I look at a chart of the DOW for the last 100 years and I calm right down.

I like tuna ( cat food?) anyway so I've got all bases covered!!!

I will say that at times like these, I am glad I took the company pension, which was a calculated decision based on how much I'd saved all my life, probable inheritances ( which did pan out, but I miss terribly the people who passed a lot more than if I'd gotten nothing...). The run up in the markets bulged my savings, my pension covers ALL my costs, and I have retiree health care...which I'm in the last year of before Medicare...and so far, they will also subsidize a Medicare Advantage plan after 65. MegaCorp was brutal while I was in the harness, but I thank God for it now....

I still plan on SS at 70 so conversion now is the way to go!!!

I am lucky... I am healthy, I am relatively happy with my life. I work hard to take care of myself, and thank God I don't need medications (yet!!!)...

Spring is here!!! I plan to rejoice...only so many springs and summers in our life...

 

[Sunset]

I did some of my planned amount for 2020 last week, and have some left to do later in the year....

I've missed opportunities in the past, so took advantage this time....

Who knows? All I know is I HAVE to convert ( I'm 64) as much as possible while rates are this low....I may even convert MORE than I was planning to during a low period,because...

This too (market drop) shall pass. When I start to panic...I look at a chart of the DOW for the last 100 years and I calm right down.

I like tuna ( cat food?) anyway so I've got all bases covered!!!

I will say that at times like these, I am glad I took the company pension, which was a calculated decision based on how much I'd saved all my life, probable inheritances ( which did pan out, but I miss terribly the people who passed a lot more than if I'd gotten nothing...). The run up in the markets bulged my savings, my pension covers ALL my costs, and I have retiree health care...which I'm in the last year of before Medicare...and so far, they will also subsidize a Medicare Advantage plan after 65. MegaCorp was brutal while I was in the harness, but I thank God for it now....

I still plan on SS at 70 so conversion now is the way to go!!!

I am lucky... I am healthy, I am relatively happy with my life. I work hard to take care of myself, and thank God I don't need medications (yet!!!)...

Spring is here!!! I plan to rejoice...only so many springs and summers in our life...

Sounds pretty good, you have a lot of the bases nicely covered

 

[Dash man]

I was fortunate to pick a good time last Friday to do my conversion. I expect the markets to remain volatile, so just pick a down day and go for it.

 

[jollystomper]

You could consider some type of "dollar cost averaging", periodically taking a constant amount of cash and moving it into the Roth IRA. Same strategy as one may have used when investing savings into the market.

 

[VanWinkle]

It was part of my financial plan to do a partial conversion from IRA to Roth in 2020.

Is it a good time to do that Roth conversion *now*, while the market is down, instead of waiting until the end of the calendar year as had been planned?

I have bunch of cash sitting in my IRA right now, since I just retired on 2/7 and rolled my old 401k over into it--those funds transferred right in the middle of last week's carnage.

Seems to make sense to do the Roth conversion now, so I'll reap the biggest gains from future recovery *inside* of the Roth (maybe by buying an ETF in the Roth)--or am I missing something?

TIA.

I just completed a conversion for the reasons you have listed. I moved out of bond funds in the IRA(selling high) and bought a stock fund in the Roth(buying low). Time will tell if it was a good decision, but history is on my side.

 

[H2ODude]

Did ~1/2 of 2020's amount a few days ago, will do rest in a week or two. Yeah, I know, that's market timing but the only mt I'll engage in. You have to call Fido to do it, but can just have them move shares of mutual funds from tIRA to Roth; no selling and moving then buying. Easy peasy.

 

[harley]

Did ~1/2 of 2020's amount a few days ago, will do rest in a week or two. Yeah, I know, that's market timing but the only mt I'll engage in. You have to call Fido to do it, but can just have them move shares of mutual funds from tIRA to Roth; no selling and moving then buying. Easy peasy.

I did the same thing today, 1/2 my yearly planned amount. I usually don't do it until end of year, because my income is fairly unpredictable. I did mine with Vanguard, existing tIRA to existing Roth. I was able to do it all online, even easier peasier. Sweet!

If the market keeps falling I'll be tempted to do the rest, or even more than I had planned for. If I do it and go up into the 24% bracket on the last part, it won't be the end of the world. More important is making sure I have the cash available to pay the taxes.

 

[Midpack]

I'm doing my Roth conversions in 4 equal quarters, each about two weeks before estimated taxes are due. While there may be an advantage to converting low, I'm not going to chase timing on Roth conversions. YMMV

 

[BeanCounter62]

I have rollover IRAs at Vanguard and Schwab and a 401k with Fidelity.

With the low market, seems like it might pay off to go ahead and do my first Roth Conversion.

I know there have been threads showing tools to estimate the tax impacts on a conversion - but I'm not very good at searching the forums. Can someone give me a link to where I should be looking?

I'm figuring I'll do the conversion in the account which is the most helping for current re-balancing of pre/post tax account structure.

Is one of these companies easier than the others for opening a new ROTH IRA and shifting $$? (Maybe that's too personal a question! Everyone has their own favorite!)

Am I correct that I should be able to transfer the shares from the t-IRA and/or 401k to a new Roth IRA directly (and of course pay taxes based on the value on the date of the transfer).


Hoping I can take advantage of the market downturn while not looking at the amount the bottom line has dropped. I've got time for it to bounce back. (I'm 57 with 1M in pre-tax retirement accounts and rental income/CRT income that keeps me above the lowest tax rates)

 

[augam]

I believe it may be or should I say potentially could be. My plan is to convert a sizeable share if not all of an equity I purchased yesterday that has taken a beating in the last few months.