2021 seemingly was the year of Roth conversions. We had multiple clients joint our regulars who do annual conversions.
A Roth conversion needs to go directly from brokerage to brokerage with no income limitations as well as no conversion amount limitations.
But all of the converted funds are subject to ordinary income taxes.
The benefits of the Roth conversion are to have all future dollars growing tax free forever or until withdrawn from the account.
I recently was on a webinar that was contra Roth conversions, their thought process was that most people when they retire remain in the same tax bracket, so there is no tax saving. They also state that and the loss of funds for taxes, makes the recovery period overlong versus leaving the funds to grow. Thus creating opportunity losses, that take over a decade to overcome.
I have never made this calculation for a client, I assume that they are getting this information from their broker. But it is something to keep in mind before doing the conversion.