Celebrating Over 21 Years of Excellent Service
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Celebrating Over 21 Years of Excellent Service


Roth IRA’s and 401 k’s with Roth subaccounts are getting more and more popular.  People are realizing that paying the Tax Man now and never again is very appealing.

I have always said a Roth is like paying taxes on the Seed Money and getting the Harvest for free.  But the catch always is: How much tax is it going to cost me?

There are a lot of variables of course but there is a hidden gem just waiting to be discovered.   What is this gem – the depressed stock market.  A lot of retirement accounts are down 25% – why not consider doing a Roth conversion now.  With stocks and bonds lower, the tax bite would be much less.  Then when the rebound hits, voila tax free as long as you meet the Roth Rules.  A Roth must be in existence for five years and the owner must reach the age of 59 ½.

Roth contributions have annual limits but one huge advantage of doing a Roth conversion is

NO LIMIT how much you can convert!  Inside a self-directed 401 k, you can do a Roth Conversion by simply saying ‘today I am going to convert some funds to Roth”.  You then transfer those funds from your traditional 401 k account to the designated 401 k Roth account.

As trustee of your plan, you will have to issues a 1099 R to yourself and pay the taxes next tax period.  That’s it, no middleman, no custodian and their fees!

One piece of caution is this:  Be careful that you don’t convert so much that it nudges you into a higher tax bracket.

No one knows how long this “sale” will last but it is certainly something to look into.

At Self Directed Retirement Plans LLC – we will be happy to discuss with you.