John, very good to see you. I have an important question: How old is too old for a Roth conversion? We know taxes are set to increase in 2026. Even though it may not feel like it, we are living in a historically low tax rate right now of course. So let's talk through the pros and cons of a Roth Conversion for someone in their 70s. The first pro of course, if you convert your IRA to a Roth IRA, you and your beneficiaries will have tax free withdrawals.

Yes, so, you know, we've talked about the power of Roth conversion in tax management. So let's take a look at the pros of converting that money to tax free. Number one, the withdrawals, like you said, are tax free, they don't count as income tax. More importantly, if you were to die and you left that money to your beneficiaries, they have the ability to let those Roth accounts grow for 10 years before they have to have them zero balanced and that money can compound and grow tax free for 10 years. The other thing, you know the other thing too, Erin is we always talk about IRA and401k money being a tax time bomb. This is a way to reduce that tax time bomb against future tax rates and tax uncertainty. And you essentially give yourself control over your future tax rates.

So the next pro: No required minimum distributions, which means you'll have again more control over your tax liability.

Yeah, so for the sake of this video, we're just gonna say your RMDs are starting at 73. If you're converting as much as possible, you're reducing that required minimum distribution. Now the RMD only becomes an issue when you need to take additional income that does not meet the RMD table set out, set forth by the IRS. However, that is a big issue for a lot of people, especially people with pensions. So if you start to reduce that future tax liability that RMD that means your RMD is going to be the required RMD that you have to take in the future it's going to be less and what is that going to do? It's gonna lessen your tax bill, and that is a win.

So now let's move on to the cons though, when you convert, you will pay all those taxes up front which could mean a very big tax bill come April.

Yes. And this is where the planning becomes very important. When you make a conversion, I'd say a conversion here and 2024 When you go to pay your taxes in April of 2025, you will owe the income tax on that Roth conversion. So you have to understand, especially since you’re over 70 and you're getting Social Security and Medicare. You want to make sure that you understand your tax bracket and more importantly your modified adjusted gross income. So you can control that tax bill that is coming due in April. However, although we are saying that’s the con right, you have to pay your taxes. That's just a certainty. The big pro here is, while we don't like paying taxes, you understand your tax bill and you have control over what your tax bill is going to be. You can decide to convert as little or as much of your IRA account as you decide.

So now our next con. Uncertainty over future tax tax rates, they could go higher, they could go lower. We just don't know.

They could. You know Erin, I like to kind of do a reverse of what the market risk is when it comes to tax risks. We've done a lot of videos on the markets being at all time high, and what is that? That is the point of maximum financial or market risk. Well I like to flip that table upside down when it comes to taxes. When we are at some of the lowest tax rates in history. We are really at the highest point of tax rate risks. So we have to understand that we are well over $30 trillion in debt. We have a reckless government when it comes to spending. And, you know, 20 years ago, Robert, the former Controller General Walker, was talking about that taxes are going to have to double to squash a then $10 trillion debt. So yes, taxes could go lower. The question is how much lower? Maybe a couple percentage points. On the flip side, can taxes go higher? Absolutely and we have a, you know, history has shown that the highest marginal tax bracket post World War Two was 90% and in the 70s it was in the 70%. So we have a huge ceiling for tax rate increases.

Okay, so let's break it down to brass tax now. Let's say that I am 70 years old and I can pay that tax bill in cash right now for that conversion. At what age though, because that would be a yes for most people, at what age does the yes become a no.

Well, you know, age is just a number, taxes are a harsh reality. So you're a sprightly 70 year old and you're, you're competing with your Scrooge business partner, the IRS. So the question is, it really depends on a bunch of things. Number one, if you're not at RMD age, up to RMD age is indefinite and you know if you're over 70 and a half you can offset from your Roth conversion tax bill with qualified charitable distributions also. So up until RMD age is a great way to convert money. Once you're at RMD age you have to understand that you have to take your required minimum distributions first. Then you can do your Roth Conversion. And you know, as I mentioned, again, if you're in poor health or your spouse is in poor health, regardless of what age you are, that could be a good strategy to avoid the widow tax.

Well clearly no cookie cutter answer here, John and I know we have many, many strategic tax planning videos on YouTube and everything else. But if somebody has questions and wants to talk this through, how can they get a hold of you? Yeah, you can visit our website at www.gosecurus.com. We have a ton of resources, the past videos on various tax topics. While you're at our website, you can visit the contact us tab and from there you can schedule a 20 minute complimentary phone call where we'll answer any general questions or you can schedule a complimentary vision and clarity consultation. Or if you like doing things the old-fashioned way give us a call at the office 858-935-6210, ask to speak with Emily Wale and she will get you on my calendar.

Great. John thanks so much for your time today.

Thank you Erin.