Key Takeaways
Lower incomes and declines in retirement plan balances present an opportunity to convert to a Roth 401 (k) or IRA
Lower asset values and effective tax rate make the cost of conversion cheaper
A lower tax rate today relative to the rate at which future IRA withdrawals would be subject is more beneficial
The fallout from COVID-19 will likely result in lower incomes for millions of Americans this year. In addition, many individuals have experienced a sharp decline in their retirement plan balances. While never sought after, such outcomes do present a unique, long-term planning opportunity. Those affected can enhance tax efficiency and accumulate wealth by converting a portion of a traditional retirement plan to a Roth 401(k) or Roth IRA.
