Get Insured 24/7
Get Insured NowRenew Your Insurance
  • Life & Health Agents
    • Other Professions
  • Guide to E&O
  • About
  • Contact
  • Enroll In E&O Insurance
  • Renew Your E&O Insurance
  • Full Pricing Transparency
  • Blog

Home » Roth IRA Conversions May Trigger a Lawsuit

Roth IRA Conversions May Trigger a Lawsuit

Posted December 22, 2020 by Steve Savant Leave a Comment

The strategy of a Roth conversion is premised on the arbitrage, or the difference, of a client’s current and retirement tax brackets. The advantage is paying taxes today and none in retirement’s tomorrows. The additional feature to this conversion strategy eliminates exposure to the provisional income test for Social Security taxation saving benefit taxes because Roth IRAs are not subject to the test.

But keep in mind the client may not have to pay taxes at all with the standard and senior tax deductions (age 65 or older) at $27,400. Many seniors will file the easy form and take both deductions, offsetting any qualified plan income. Because of these tax deductions, many Roth conversions are unnecessary, i.e. the taxes paid triggered by the conversion is a complete waste of money and exposes the agent or investment adviser to arbitration or lawsuit.

This is the next big liability for financial professionals who discuss the tax arbitrage when they shouldn’t be discussing it at all much less executing a trade that will cost most conversion clients unnecessary taxes.

Filed Under: Insurance Agent Ethics

Leave a Comment Cancel reply

Your email address will not be published. Required fields are marked *

Get Insured 24/7, LLC
"My experience purchasing E&O insurance from your website was exceptional. It was quick, easy and I was able to reduce my cost of insurance by 70%!! Unbelievable! Thank you guys!"
- Dan Ross, Founder and President of Med-Vision, LLC

Don’t forget to renew!

Sign up for a reminder to renew your errors and omissions insurance before it expires.
  • MM slash DD slash YYYY

  • Life and Health Agents
  • Guide to E&O Insurance
  • About
  • Contact
  • Blog
  • Privacy
  • Get Insured

Copyright © 2022 Get Insured 24/7 LLC. All Rights Reserved. Web Credits