Roth Conversion

A recent paper from Vanguard sheds light on when it makes sense to transfer funds from a traditional IRA to a Roth IRA (a Roth conversion). Recall that the proceeds of a Roth conversion are subject to taxation at the investor’s marginal rate, but the converted funds are tax-free forever (i.e., until the account is depleted either by the investor or his heirs).

After much political drama and grandstanding, the GOP’s Tax Cuts and Jobs Act is now officially the law of the land, taking full effect in 2018. We won’t bore you here with talk about changes to tax rates or attempts to identify the winners and losers. Nevertheless, there are three changes that we consider noteworthy and have received little attention from the mainstream news outlets.