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795 Woodlands Pkwy #104
Ridgeland, MS 39157
Beth spent four years in the investment world before joining Medley & Brown in 2004 as our operations coordinator. She and her husband Robbie are busy parents to identical triplet daughters, so not surprisingly, some of Beth’s favorite things to do are napping and relaxing on the beach when she actually finds the time. Beth also enjoys taking short walks to the pool, attending concerts, and going out of town for long weekends. Beth loves her Mississippi State bulldogs and currently has four dogs, three cats, and three grandcats because having three children simply isn’t enough. No wonder her operational skills are so exceptional.
Eddie’s extensive education includes a B.S.B.A. in accounting, with special distinction, from Mississippi College in 1994, along with a J.D. from Vanderbilt University and LL.M. (Master of Laws) in taxation from the University of Florida. But it’s what he’s learned outside of school and work that really stands out. He’s an Eagle Scout, which taught him a great deal about honesty and hard work from an early age. He learned even more earning black belts in Taekwondo, Hapkido, and Hanmudo. Oh, and he studies the Korean language in his spare time as well. Additionally, Eddie serves as an adult leader for Scout Troop 164 in Madison. He is a past board member of Hope Hollow Ministries, the Central Mississippi Down Syndrome Society, and the Mississippi Corporate Counsel Association. Eddie is currently a board member of the Woodward Hines Education Foundation. He enjoys spending time with his wife, Sarah, and their three children—Andrew, Caroline, and Emma.
Judging from his background, you’d think investments and other financial matters were all Julius cares about. After all, he has two decades of direct investment experience and spent the previous ten years involved in banking and real estate. Julius also received a masters degree from the London School of Economics in 1998, an MBA from Millsaps College in 1993, and a history degree from the University of Mississippi in 1990. But his true passions include driving sports cars on racetracks or twisty mountain roads, running ultramarathons, and taking road trips with his wife and son. He’s worked here since 2002 as a Chartered Financial Analyst (CFA) and member of the CFA Institute while also serving as an adjunct instructor at Millsaps College and board member of New Stage Theatre. It takes major dedication to tackle all these responsibilities—sort of like training for all those long distant runs—but Julius enjoys every minute of the grind. And when it’s time to slow down, Julius finds the best way to clear his head is taking long hikes in the mountains on all those road trips.
Should I Convert My IRA to a Roth?
We get this question from time to time. The answer is: “It depends.” More specifically, it depends on what you expect your tax rate to be when you eventually withdraw from the account.
When you convert retirement assets to a Roth IRA, you will generally owe income tax on the amount converted. But, whenever you eventually take any funds out of the Roth, you will not be taxed. Nor will your beneficiaries, if they eventually inherit the Roth.
With a traditional (non-Roth) IRA, you are usually able to deduct any contributions to it. But you must begin withdrawals from it the year you turn 72. And any amounts withdrawn are taxable income to you. If your beneficiaries eventually inherit the IRA, they will also be taxed on amounts withdrawn.
If your tax rate remains the same, then neither approach has a significant advantage over the other. For example, let’s say you have a $100,000 IRA. And let’s assume a 6% average annual rate of return and a 20% tax rate both now and after 20 years. Converting the $100,000 to a Roth results in a $20,000 tax, leaving $80,000 to invest. After 20 years, at 6%, the account will have grown to $256,571. All $256,571 can be withdrawn free of taxes.
If, instead of converting to a Roth, you leave the $100,000 in a traditional IRA, after 20 years, the account will have grown to $320,714. But, withdrawing that amount creates a tax of $64,143, leaving a net withdrawal of $256,571, the same as in the prior example.
As you can imagine, the tax rate(s) applied make a big difference. Adjusting the timing or amounts of conversions and/or withdrawals, or the tax rate applicable to them, can easily favor either approach over the other. Whether one should convert, avoid converting, or convert a portion as a form of tax diversification should be based on an individual’s circumstances.
Eddie Carlisle
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