Monthly Insights Newsletter | August 2021

Patrick’s Planning Post

The Ins and Outs of Roth Conversions

You may have heard the term “Roth conversion” thrown around. The strategy has gained popularity amongst professionals over the last 24 months. So what is it?

Quite simply, a Roth conversion is a taxable event in which an individual converts a portion of or the entire balance of a pre-tax retirement account. The amount converted is taxable as income in the year the transaction occurs. The proceeds can then be reinvested in a Roth IRA, where the funds will receive tax-free treatment upon withdrawal.

But why add taxable income to your AGI if you are currently working and possibly in your peak earning years? Is it right for you?


Liebmans’ Library

In this section, Matt Liebman and Sam Liebman will share 1-2 articles or charts per month that caught their attention related to the Investment Markets.
Starting when Matt was in Elementary school, he would walk into his room and find newspaper or magazine articles about sports, politics, business, or markets that Sam had cut out for Matt to read. The tradition has continued for over 30 years. Now the article flow goes in both directions and the articles are usually sent via text. For this month, we chose a Barron’s article that focuses on the rather uneventful, nonexuberant manner in which stock markets keep grinding higher.


Aaron’s Action Items

Each year, it is important for clients to have their Financial Advisor and Tax Professional work hand-in-hand, but this year could be even more critical depending on what tax changes are on the horizon.

Potential adjustments are an increased top individual federal income tax rate, long-term capital gains rate increases, and the possibility that cost basis “step up” at death is removed.

Our recommendation is to not wait until December to have conversations about how to minimize tax both this year and in future years. Accountants will be swarmed with clients looking for advice on how to best navigate these obstacles, so getting started earlier will allow you and your trusted advisors to formulate well-thought-out plans heading into 2022.