There’s no doubt that market volatility is unnerving for investors. And, yes, these wild market swings require a whole lot of handholding by advisors to soothe the fears of anxious clients.
But there is an upside to markets that collapse on a dime, or a tweet. An oversized drop in stocks could also signal the perfect occasion to take advantage of a Roth conversion.
Just don’t call it market timing.
“If a client converts when the market is down, the eventual recovery occurs within the tax-free Roth account. This matters because a Roth conversion creates an immediate tax liability in the year of the conversion,” said Chris Moring, senior wealth advisor at Quotient Wealth Partners.
“As a result, there is typically a breakeven point, which may not occur for several years, depending on the size of the conversion. Converting at a market low and capturing the recovery in a…
