Roth Conversions: What’s the deal?

Micro moves, maximum discount.

Roth Conversions feel like the protein craze of the financial world: Everyone is obsessed with the concept, but few actually understand how to optimize the numbers. So, let’s start with the basics.

What is a Roth Conversion?

Simply put, a Roth Conversion is the act of moving money from a tax-deferred IRA (Traditional) into a tax-free IRA (Roth). In the process, you pay Uncle Sam now, so your money can compound and grow for years to come, tax-free.

A lot of folks think they need a grandiose strategy and tax plan to make this happen. But it doesn’t have to be complicated or overwhelming if you have the right advisor. At Thornwood Financial, we take a savvy approach to Roth conversions, conducting a series of micro money moves to reduce your overall tax bill.

What is the Thornwood Approach?

Because we tactically manage our portfolios—meaning we select and invest in individual stocks rather than ETFs or mutual funds—we wait for a stock to lose value and jump on the opportunity. Say, for example, a reliable stock like Apple drops 20% or 40% in a day. Suddenly, an investment valued at $10,000 is worth only $6,000. When that happens, we act, converting the undervalued stock into your Roth IRA.

Instead of paying tax on $10,000, you pay tax on only $6,000. Your shares are free to recover and grow, tax-free, for years to come.

We don’t have a crystal ball, but that’s pretty close to a sure thing.

Why don’t most other advisors conduct micro Roth conversions?

Most advisors simply can’t perform micro conversions because they’re not investing your funds into individual stocks. Thornwood portfolios are unique in that they are tactically managed with carefully selected stocks—not an ETF selection that anyone could replicate. When the market declines, we’re able to strategically react, taking advantage of the chance to buy a bargain and convert IRAs at a discount.

Ready to get your hard-won earnings into a tax-free account?

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