Some people believe there is a lost opportunity cost by doing a Roth conversion—that the funds used to pay the conversion tax could have been otherwise invested, and that investment return opportunity is lost.
False: It’s all about the tax rates
There is NO opportunity cost in terms of lost investment gains if the tax rates are the same both at conversion and later at distribution. Let’s look at the math:
Important Disclosure
This information is not intended as authoritative guidance or tax advice. You should consult with your tax advisor for guidance on your specific situation. Ed Slott and Company is not affiliated with LPL Financial or Beacon Financial.
Copyright © 2021 Ed Slott and Company, LLC. Reprinted with permission. Ed Slott and Company, LLC takes no responsibility for the current accuracy of this information.