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YCharts—Should You Consider a Roth IRA Conversion?

October 27, 2023

Do you think your tax rate will be higher in the future?

Look at this chart by YCharts showing the historical tax rates for the lowest and highest tax brackets.

For the highest bracket, the historical average (not the high) is 57.69%, although we are currently at 37%.

Some believe that taxes may increase in the future. Here are the facts:

  • Higher tax rates may be part of any proposed solution to the current U.S. deficit.
  • The time to manage your taxes is when you understand the current rates.

Every person’s situation is unique, but as we approach year-end, a Roth IRA conversion for a portion of your retirement portfolio may be a strategy to explore a bit more.

A Roth IRA must meet a 5-year holding rule and occur after age 59 1⁄2 for the tax-free and penalty-free withdrawal of earnings. Tax-free and penalty-free withdrawals can also be taken under certain circumstances, such as the owner’s death. The original Roth IRA owner is not required to take minimum annual withdrawals.

This post is for informational purposes only and is not a replacement for real-life advice, so make sure to consult a tax professional before moving forward.