How do I pay the taxes on my Roth conversions?
That is the question I hear all the time when retirees are doing conversions. They have done the planning necessary to see if Roth conversions are beneficial for them.
But when it comes down to the logistics of how to pay the taxes, that's where many get stuck or make mistakes that lead to penalties.
In this video, I cover the 2 primary ways to pay taxes on your Roth conversions. Then I tell you why I think one way is better than the other.
I hope it helps!
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⏱ Timestamps ⏱
0:00 Intro
0:22 Roth Conversion Overview
1:21 1. Pay Taxes by Withholding From Your IRA
1:52 Withholding Example
2:15 Early Withdrawal Penalty on Tax Withholdings
2:49 Penalty Does NOT Apply to Full Conversion Amount
3:43 Example of Penalty
4:10 2. Pay Taxes with Cash
4:46 The Best Way to Pay Roth Conversion Taxes
6:02 The Importance of Cash in Retirement
6:26 Outro
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