What is Roth Conversion?
episode
DIY Money | Personal Finance, Budgeting, Debt, Savings, Investing
13 min
4 speakers
2 chapters
transcribed 1 month ago
Transcript
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Transcript generated automatically by AI and may contain errors.
What is the episode about and how does the intro set the stage?
Hey, this is Allie, and thanks for listening to the show. Give us a five-star review where you listen and share this episode with someone who might need to hear it. Now, enjoy the show. Welcome back, ladies and gentlemen. You're listening to another edition of DIY Money. DIY Money. Okay, last time you asked who was going to win the Super Bowl. I mean, let's say I know who's going to win. Buffalo's going to win by far, no question about it. What do you think? But do you think who will they be playing in the Super Bowl?
I think they're going to lose to the Packers in the Super Bowl.
Packers looked good the other night. I was really impressed. They looked really, really good. But so did the – I mean, that Ravens-Buffalo game.
That was the most crazy game I've ever seen.
So I went to bed, okay, because it's past my bedtime. Me too. And then in the first half, Buffalo wasn't playing great. I know you Bills fans out there, you're going, you went to bed? Are you kidding me? But I got up in the morning early. I was able to catch all the highlights, which means I still got my good night's sleep. I still watched it. I would not have been able to sleep. If I stayed up and watched that game – I would have been up all night long. What a game. I mean, and what a finish. But I'll tell you, I mean, aside from that fumble and then the coming down, I mean, Ravens were fire. They looked really, really good. Derrick Henry is unbelievable. He's unbelievable. I mean, yeah.
He's like a 48-year-old running a – oh, wait.
Oh, booyah. Yeah, let's throw that in again. No, we don't need to talk about that anymore. The 310, it's perfectly fine. Yeah. We'll leave that there.
How much was that per mile?
Yeah. But anyways, so, yeah, NFL's fire. College, man, Kentucky's struggling. It's not great. It's brutal. But it's still fall. It's still a wonderful time of year. We love it. It's a bull market. Market seems to go up every day, which is ridiculous. But, hey, I'll take it. No problem. Yup. We got a good question today from Sam. But first, we're going to do our sponsors. Oh, yeah. Let's take a break real quick for our sponsors. Okay, thank you for those sponsors that keep the show going. We also have our perpetual legacy sponsor, Juul Financial. If you have a complex situation or need a second opinion, visit us on the web at Juul, J-O-U-L-E, financial.com. That's J-O-U-L-E, financial.com. Learn more about our services.
All right, let's go to Sam. Sam, what do you got?
D-I-Y!
Hey, DIY Money. This is Sam from Michigan, a relatively new listener, but I already found your show super helpful. So thank you for that. I have a question regarding whether to roll over from a traditional 401k to a Roth IRA. I'm currently working as a self-employed contractor, making about $120 a year. At my previous job, I was making a lot more at about 200k a year. And I currently have about 140k sitting in 401k from that previous job. And I've been learning about, you know, IRA and Roth IRA and seems like, you know, it's a smart decision to roll over what's in the 401k to the roth ira when it makes sense from a test perspective right so right now i'm making a little bit less than what i used to make and this is kind of a temporary situation so in the next year or maybe two year i'll probably get back up to that 200k or maybe even higher so i'll be i'll end up in a higher tax bracket
So I'm kind of wondering if I should be taking advantage of the current situation where I'm in the lower tax bracket to convert some of those money in the 401k to a Roth IRA. And if I do, how much should I do it? I don't have the cash to do all of it. And I also don't think it makes sense to do all of it because then basically bump me up to the higher tax bracket anyways. So yeah, just kind of looking to have somewhat of a mental framework and the formula to kind of reason about all of this. Looking forward to your response. Thank you so much.
Here's what I want to do. I want to take what Sam is asking about, like the process, and then I want you to break down how we do it.
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