When a Roth Conversion Makes Sense from Darcy Bergen

Darcy Bergen

March 1, 2021

When a Roth Conversion Makes Sense from Darcy Bergen

Darcy Bergen believes that more people are taking advantage of savings by converting to Roth accounts. According to CNBC news, you could end up saving $41,000 on an IRA worth $1,000,000. This is based on the unique situation of recent stock runoffs, Darcy Bergen said.

If you’re stuck between panicking over sudden downturns and elated when the market goes up, it might be time to even out your investment portfolio with tax savings.

Darcey Bergen Discusses the Stock Meltdowns Effect on Retirement Savings

According to Darcy Bergen, Stock market volatility related to the pandemic has put a dent in many Americans’ retirement savings. However, it has created room to save money on taxes.

Here’s the strategy laid out by Darcy Bergen. You can use a Roth IRA conversion to convert a pre-tax retirement account to a Roth IRA. Pre-tax retirement accounts include 401(k)s and other qualified accounts. After-tax Roth funds have unique benefits.

Darcy Bergen Explains How This Can Save You Money

To take advantage of this strategy, you pay income tax now, while the stock market and tax rates are down, Darcy Bergen explains. This takes advantage of certain portions of the Tax Cuts and Jobs Act.

This is an extraordinary measure for extraordinary times, and Darcy Bergen doesn’t recommend using it as a regular investment strategy. It would be difficult to time the market in normal times. However, the economy may well remain depressed while run virus rages across the nation.

Stock Market Sell Offs May Continue, Darcy Bergen Predicts

Darcy Bergen and many other investors agree that recent market sell-offs may continue when coronavirus levels spike in the United States or around the world. In the meantime, you might at least get a break on your Roth conversion. This is largely due to lower taxes paid on your investment portfolio, which translates to lower overall taxes in this challenging year.

You don’t often get to shop around for tax breaks, according to Darcy Bergen. With everything that’s happened in 2020, investors have to take their wins where they can.

If you own a traditional retirement account, consider deferring taxes on your savings until you withdraw it. Since you pay the tax upfront, you won’t have to worry about coming up with the money later.

There are other benefits to Roth funds that you can discuss with your accountant or financial advisor. For example, you don’t have to take money out of your Roth account. IRA investors have to start withdrawing funds at age 72. Darcy Bergen encourages retirees to use every strategy available to decrease their Medicare premiums and Social Security taxes.