Can a down market create a Roth conversion opportunity?
Patrick Thompson
Sometimes!
A 20% market drop can quietly be one of the best things that ever happens to your retirement.
That sounds crazy, right? Nobody celebrates losing money on paper. But there's a move most retirees miss when their account is down and it can save you six figures over time. Here's the setup. Say your IRA was worth $500,000, and after a rough quarter, it's now $400,000. Painful. But your dollars didn't disappear. The same shares are still sitting there. Now imagine you move a chunk of that IRA into a Roth.
You pay tax on $400,000 worth of assets instead of $500,000. When the market recovers, and history says it usually does, all that recovery happens tax-free inside the Roth. Same shares. Same recovery. But now you never pay tax on the rebound. That's called a down-market conversion, and it works because you're volunteering to pay tax when the price tag is lowest.
Volatility feels awful. But if you have a plan, a down year can quietly become the most productive tax year of your retirement.
Want to understand how a Roth Conversion may be a strategy worth considering? Visit The Roth Conversion Planning Guide for more information.
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