Photo: Tim Pannell for Forbes ©2019 used for Lange Advice Column on

James Lange, CPA, investment advisor and Roth conversion expert, photographed for Forbes in January 2019 by Tim Pannell.


New Trump Tax Laws Make 2019 the Best Year for Millions of Americans to do a Roth IRA Conversion:  PART ONE

Because of the Trump tax laws, more owners of traditional IRAs need to explore the potential benefits of a conversion—and that also applies to IRA owners who previous to the new tax laws explored the idea and dismissed it. Further, owners of traditional IRAs who were good candidates for a Roth IRA conversion before the tax reform may find that this is the best time for an even larger Roth IRA conversion.

Your traditional IRA has a silent partner named Uncle Sam. Whenever you withdraw money from your IRA, voluntarily or because of required minimum distributions, your partner gets a big bite of every withdrawal. A Roth IRA conversion essentially buys Uncle Sam out of your partnership through an up-front tax payment. The amount you convert is added to your current income and taxed at the appropriate rate, after which the money in the Roth IRA is all yours—no more taxes will be collected on the principal or on the growth.

See where I said the “appropriate rate?” That is the key. Because of today’s lower income tax rates—which are not likely to remain sustainable—now may be the opportune time to make a Roth IRA conversion.

Benefits of a Roth IRA Conversion

Roth IRA conversions can leave you and your spouse better off by hundreds of thousands or even a million dollars during your own lifetimes, but those benefits pale in comparison to those that your children or grandchildren could enjoy over their own lifetimes.

If you are a long-term investor—particularly if you are someone who sees themselves as responsible for protecting and growing the family wealth, a Roth IRA conversion could benefit your heirs for generations to come. So, let’s get into some of the nitty-gritty numbers that support that claim. My wife, Cindy, and I made a $239,000 Roth IRA conversion in 1998. The following chart shows the benefit to my wife and me and our daughter, Erica, and our future grandchildren. This assumes a 7% rate of return for actual dollars, and I also show the benefit in inflation-adjusted dollars.

The chart above shows the benefit to my wife and I along with our daughter Erica, and our future grandchildren.

These numbers are based on the current tax laws, and they also assume no one ever spends my Roth IRA or the income my Roth IRA generates. The point is meant to be dramatic to catch your attention.

You might not think it is realistic nor even advisable that my heirs will not spend any of my Roth IRA. But even if my daughter needs the money after I’m gone, my family will benefit by hundreds of thousands of dollars and, in the long run, could be more than a million dollars better off because of my conversion.

You may also think 7% is an unrealistically high rate of return but I think you could do better for the reasons given below. Subject to some exceptions, most of my clients plan on spending their Roth IRAs only after they run out of all other funds. Then when they die, they will leave the Roth IRAs to their heirs who will hopefully allow the inherited Roth IRA to grow income-tax-free for as long as possible. What this means is that a Roth IRA, for most investors, produces better results if it is invested for the long run.

I like to think of dividing your portfolio into a number of buckets with each bucket invested differently. The first bucket (money that you need to use in the short term for routine expenses) should be invested very conservatively–with cash, CDs, maturing bond ladders, etc. On the other end of the spectrum, the longest-term bucket is money that you plan to spend last and probably won’t ever spend unless all your other resources are completely exhausted. We treat Roth IRAs as part of your longest-term bucket. Given that scenario, a 7% rate of return on a Roth IRA could be a conservative estimate.

The Best Time to do a Roth IRA Conversion

Ideally, the best time to convert your traditional IRA to a Roth IRA is when you are in your lowest tax bracket and when the stock market is down. But no one has consistently predicted market highs and lows, and they don’t ring a bell at the bottom or top. The good news is that you do know your current tax bracket, and you can take your best estimate at your future tax brackets. Armed with that information, you can begin to build a Roth IRA conversion plan that is part of your master plan.

What should you do next? How do you know if a Roth IRA conversion would be a good idea for you? How much should you convert? When is the best time to make the conversion? Should you do it all at once or perhaps make a series of smaller Roth IRA conversions over a period of years?

Please read my column next month for the answers in New Trump Tax Laws Make 2019 the Best Year for Millions of Americans to do a Roth IRA Conversion: PART TWO.

Reprinted with permission by, an online magazine where Jim is a regular contributor.

Please read Ripe Time to Roth at, an article published in Forbes magazine featuring Jim Lange’s Roth IRA conversion advice.  Consider whether now may be a great time for your own Roth IRA conversion. If you would like our team to “run your numbers,” the next step is to call 412-521-2732 and request a free consultation.