The Roth Conversion Myth Most Financial Advisors Get Wrong
Release Date: 01/14/2026
The Roth Conversion Myth Most Financial Advisors Get Wrong
The Power Of Zero Show
David McKnight addresses a myth floating around the financial world: “For a Roth conversion to make sense, you need many years for the Roth to grow so you can recoup the taxes you paid to the conversion.” David stresses why this way of thinking is fundamentally wrong – it’s built on the wrong assumption that all the money in your IRA belongs to you… when it actually doesn't. Remember: your IRA isn’t one pile of money but two piles sitting in the same account. One pile belongs to you, while the other to the IRS. What’s unknown is how big the IRS’ pile is going to be when you...
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The Power Of Zero Show
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The Power Of Zero Show
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The Power Of Zero Show
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The Power Of Zero Show
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info_outlineDavid McKnight addresses a myth floating around the financial world: “For a Roth conversion to make sense, you need many years for the Roth to grow so you can recoup the taxes you paid to the conversion.”
David stresses why this way of thinking is fundamentally wrong – it’s built on the wrong assumption that all the money in your IRA belongs to you… when it actually doesn't.
Remember: your IRA isn’t one pile of money but two piles sitting in the same account. One pile belongs to you, while the other to the IRS.
What’s unknown is how big the IRS’ pile is going to be when you eventually take the money out of the account.
David goes on to explain what happens as both piles grow and required minimum distributions kick in.
You may end up with the IRS’ pile being not just larger but taxed at a much higher rate too.
With a Roth conversion, on the other hand, your conversion translates into you carving out the IRS’ portion and handing it to them today – settling the bill while the balance is smaller and the rate may be lower.
There’s a key question David invites you to keep in mind when it comes to Roth conversions: “Is your tax rate lower today than it will be when you take the money out?”
The exploding national debt of over $200 trillion dollars in unfunded obligations for Social Security, Medicare, and Medicaid are going to require spending cuts, higher taxes, or some combination of the two.
Beware: the problem with most retirement plans is that they assume that tax rates will stay low forever!
David points out that Roth conversions aren’t about timing the market but about timing the tax code.
In other words, they’re about timing the advantage of known measurable tax rates today instead of gambling on unknown ones tomorrow.
Mentioned in this episode:
David’s new book, available now for pre-order: The Secret Order of Millionaires
David’s national bestselling book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track
Tax-Free Income for Life: A Step-by-Step Plan for a Secure Retirement by David McKnight
PowerOfZero.com (free video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David's Tax-free Tool Kit at taxfreetoolkit.com