Josh Scandlen Podcast

With a Roth you determine when you want to pay the taxes for what you put into the account. This is a benefit of the Roth that way too often gets overlooked.  Remember, anything contributed to a Roth is with after-tax money. If you choose the Roth, you pay tax now. If you choose the Traditional you pay tax later.  It’s up to you when you want to pay the tax. You can also convert all or a portion of your Traditional IRA/401k/403B/TSP to a Roth. A conversion is simply moving money from a tax-deferred account to a Roth.  For instance, if you were to convert $50,000 from your Traditional IRA to a Roth, that $50,000 will be taxable as ordinary income (OI) in the year in which you did it.  There is no escaping that. You will pay tax on that converted amount.  But again, you choose when.  Let’s play out a scenario to see how this may work for you. Sarah and Dan just retired.  As a marketing executive Sarah was making good money, $150,000 a year with a $50,000 annual bonus.