Report : D.C. Retirement | May 31, 2022

A BETR approach to Roth conversions

Investors typically decide whether to convert to a Roth IRA from a traditional IRA by comparing their current and expected future marginal tax rates. The traditional wisdom has been that higher future tax rates make conversion more desirable and lower ones make it less so. Vanguard researchers describe a break-even tax rate (BETR) that yields a more accurate view of what future tax rate would make an investor indifferent to a conversion.


Note:

  • All investing is subject to risk, including the possible loss of the money you invest.