Who at Fidelity said this?Changed my mind when Fidelity brought up......
Unless you are in a situation where estate taxes will be a problem it is really hard to justify doing Roth conversions even in the 22% federal tax bracket. Having a situation where doing Roth conversions in the 32% federal tax would be an exceptional situation.
Also keep in mind that to do a Roth conversion you may need to sell investments in a taxable account to pay the taxes and pay capital gains taxes on it. If those taxable investments are left to the kids they would inherit it with stepped up cost basis and the capital gains taxes would not need to be paid under the current laws.
Even if you are using some sort of financial advisor at Fidelity they are likely not a tax expert who does your taxes and knows all the details of your taxes or an expert estate planning lawyer.
If you are in a situation where you are concerned about you and your kids being in a 32% or higher tax bracket then you should probably be using a team of tax and estate planning experts who would be better qualified than whoever you are dealing with at Fidelity.
I use Fidelity and they can be good but you do need to be careful with them because they are a for profit company and they are not above trying to sell things like annuities. It is not impossible that the person at Fidelity is trying to create fear and doubt to try to sell you something.
If you are comparing the 24% federal tax bracket to the 28% federal tax bracket if the rates revert then that is only a 4% difference and it is impossible to predict the future with that much precision.
If you are going to spend $50K+ to benefit your kids then you might consider just giving them the money now when they have a need for it instead of decades from now when they would inherit it when they may already be retired and not have any use for the extra money.but the resulting tax savings for my kids is pretty convincing.
Statistics: Posted by Watty — Tue Dec 10, 2024 8:00 am — Replies 6 — Views 229