IRA and 401(k) Planning Opportunities During Volatile Markets

The market just dropped dramatically. Your IRA or 401(k) is down bad, and your gut is telling you to do something about it. The problem is, most of the things people instinctively want to do when the market tanks are exactly the wrong moves. But buried inside that volatility, if you know where to look, are some of the best retirement and tax planning opportunities that exist—opportunities that only show up when things get really scary. Today, I'm going to walk you through some of these opportunities, and I'm going to tell you where people blow it so that you don't make the same mistakes.

00:01:02
Welcome to Retired-ish, a podcast for folks who are retired or approaching retirement and want the truth about what really matters when it comes to their money. I'm your host, Cameron Valadez, and today's episode is all about what you should consider doing with your IRAs or 401(k)s when the market gets volatile. And I don't mean like, "Hey, just today the market was up or down 2 or 3 percent," which is a pretty volatile day in and of itself, but I mean multiple, highly volatile weeks or months. This isn't stuff that the news is going to be telling you, and it has nothing to do with what stocks to buy or sell. It's about what strategies might make sense from a tax and retirement planning perspective, and how they might be supercharged during times of extreme market volatility. And again, these aren't things that we are looking to do when you wake up in the morning, and you go, "Oh my gosh, the market or my investments are up or down 2 or 3 percent that day or that morning."

00:02:05
No. You should expect that kind of volatility when you're investing in the stock market, period. That is very normal. I'm talking about very heightened volatility, usually because of some larger news story or elongated issue with our economy, or some shock that hits the market out of left field, something that we never saw coming. Sort of like COVID-19, for example, or the Great Financial Crisis, and the market's initial reaction to those types of events. So when it comes to the different strategies that you might start looking into with a little more intent when markets get volatile, we're looking at things like Roth conversions, strategies around RMDs, a little-known strategy called net unrealized appreciation, or NUA for short, that has to do with those of you with company stock in your 401(k) plan, and something called 72(t) payments. That, again, is a very specific situation, but an important one to understand if it applies to you now or might in the future.

00:03:12
I'll make sure to flag any nuances with some of these strategies along the way that I think are worth your attention. Let's start with Roth conversions. This is genuinely one of the most powerful planning opportunities that market downturns can create or actually supercharge, the effect of. And most people completely miss this opportunity because when markets are down, they're worried more about their account values and how to stop the bleeding rather than looking for the silver lining. So here's the basic concept: when you do a Roth conversion, you are moving money from a traditional pre-tax IRA, or maybe even a pre-tax 401(k), into a Roth IRA or a Roth 401(k). You pay ordinary income tax on whatever you convert in the year that you do it. In exchange, that money now grows tax-free and comes out tax-free in retirement from the Roth account.

00:04:15
So there are no required minimum distributions in these Roth accounts during your lifetime either, which is a big deal for estate planning and for managing your income and your taxes in retirement. We've talked about the nuances of Roth conversions many, many times before on this podcast, so if you'd like to learn more, go back and look through some of our previous episodes that talk about Roths and Roth conversions. Why does a big market downturn make this Roth conversion strategy even more attractive than it already is? The answer is simple math. Let's say you have 1,000 shares of some sort of stock fund in your IRA. When the market was up, each share was worth $50, so you had $50,000 worth of that fund sitting in your IRA.

00:05:06
If you converted all of it, you'd owe taxes on $50,000. But now the market drops, and those same 1,000 shares are worth $30 each. Note that you still own the full 1,000 shares; they're just worth less. So now you're looking at $30,000 total. You convert those same 1,000 shares, you pay taxes on $30,000 instead of $50,000. When and if the investment recovers, and historically, as a long-term stock investor, the odds are heavily in your favor, those shares are growing back tax-free inside your Roth.

00:05:50
You bought low and locked in a lower tax cost on the conversion. That's the big opportunity. Notice that this has little to nothing to do with the particular investment itself and what its return is, or was, or could be compared to another investment going forward. This piggybacks off what I just mentioned earlier: when there is severe market volatility in the wrong direction, down, most people are freaking out, figuring out a way to stop it from happening and stop seeing their account statement reflect lower and lower numbers. If they've already taken a massive hit, they might think about changing investments and taking on more risk because they want to "make their money back faster," right? If the markets do reverse and start going back up. Ultimately, that's not a strategy.

00:06:46
It's just guessing and speculating at that point, and you're more likely to get hurt doing something like that. If you are already planning to do a Roth conversion later in the year, regardless of what's going on in the markets, this is a great reason to potentially pull that decision forward and do it sooner. Convert while the values are depressed. You never get to know whether or not the markets or your particular investments will continue falling, even after you convert, or if they will change course and start trending upward. You might want to create a set of rules for yourself on when you are going to convert and how much you are going to convert. For example, if you know you are going to do a Roth conversion in a given year, maybe you've done some tax planning for the year, and you said, "It makes sense for me to do a Roth conversion at some point this year." Well, if you're going to give yourself some rules, you might decide to dollar-cost average your conversions, meaning you might convert a set amount, maybe every month or every quarter, to smooth out the volatility.

00:07:56
While you're doing this, if in the middle of the year the market or your investment takes a significant hit, consider bumping up your next conversion amount while the market is still down. Here's an example. Let's say Karen has been steadily converting $5,000 per month from her traditional IRA to her Roth IRA, and her plan is to convert $60,000 total for the year. When the market drops in March, she increases her April conversion to, let's say, $10,000, and then she does the same in May because the market is still down. She can maintain the same total conversion of the $60,000 if she wants in her tax budget for the year, but she's just converting more shares sooner at these lower depressed prices. And when the market comes back, those additional shares are going to be growing tax-free.

00:08:51
One important thing to note before executing a Roth conversion: they are permanent. They cannot be undone. Prior to the Tax Cuts and Jobs Act of 2017, there was something called a re-characterization. That allowed you to essentially reverse a Roth conversion if you think you made a mistake. That's gone. Congress eliminated it. So if you did a large Roth conversion before the market tanked and now you're like, "Hey, I want to undo that," and then redo it, you can't go back. You will owe taxes on the amount you converted, period. I've had conversations with people who didn't realize this, and the frustration when they find out is very real. So make sure you've done a detailed enough analysis before doing a conversion. Know how it's going to impact your retirement income. Know how it's going to impact your taxes now and later, or might. Know how it's going to affect your estate planning, things like that.

00:09:46
By the way, if you're looking to convert funds that are in the pre-tax sleeve, let's call it, of your 401(k), always consult what is called your plan document to be sure that you can actually do it. It's called an in-plan Roth conversion, and not all 401(k) plans allow it. If your plan does not allow it and you would still like to do a conversion from the plan assets, you may need to do a workaround by rolling some of the funds into an IRA first and then doing the conversion to a Roth IRA. However, there's many important nuances to this type of strategy, so definitely consult your specific plan document and your professional advisor if you have one.

00:10:30
Another trap that catches a lot of people off guard when it comes to Roth conversions: capital losses on your tax return do not fully offset Roth conversion income the way that many people think. So we've run into this quite a bit with prospective clients or even people that we just talk to in our day-to-day profession. Let's say that you sell some stocks in your taxable brokerage account at a loss. You're sitting on, let's say, $20,000 of capital losses, and you might think, "Great, I'll use those losses to offset my Roth conversion income if I do a Roth conversion this year." Not so fast. Capital losses first have to be used to offset any capital gains that you might have, and then any excess capital losses that you have over and above that can only offset up to $3,000 of ordinary income in a given year. And Roth conversion income counts as ordinary income. So if you have $20,000 in capital losses, and let's say you have no capital gains, you can only use $3,000 of that $20,000 against your Roth conversion this year, and then the rest of it carries forward.

00:11:45
Now, there's a different scenario that works well, and that's if you have pass-through losses, which are losses that flow through from a business or a partnership interest on a K-1 in which you materially participate in that business. Those can be ordinary losses and can be used to offset Roth conversion income dollar for dollar, but again, that situation is pretty nuanced. You've got to have a business that you're, again, materially participating in, and you have real losses. So if you're a business owner or have a partnership interest that's generating these losses in this year, and you materially participate in that business, that's a real opportunity to do a much larger conversion that you might have otherwise planned or maybe didn't originally plan to do.

00:12:38
In practice, we have often found many opportunities when people have a combination of retirement accounts and rental real estate. Many times, you might have a property or two that have significant, what we call, suspended passive activity losses. These are basically losses from operating the rental in certain years, and those losses just keep getting banked because, on paper, the rental was not making money in those years. So it's operating on paper at a loss. You're just banking those losses. If you're considering selling one of those properties at some point, when you sell it, those suspended losses basically get unlocked and can be used to potentially offset ordinary income, not just income from the rental property itself. So part of ordinary income would be income generated by a Roth conversion. So if you're trying to do any sort of strategy that has the potential to offset income that is generated from a Roth conversion, it's usually best to consult a tax professional because this is where tax law can get really tricky.

00:13:51
And the bottom line on these Roth conversions: the heightened market volatility is a gift for people who are planning to do them anyway. Pull conversions forward when the pre-tax retirement account values are lower or depressed. You just know the rules before you execute. I can't say that enough. Now let's talk about required minimum distributions, or RMDs, because I get a lot of questions about this when the market drops, and I want to set realistic expectations here. Unfortunately, there is no silver lining with RMDs during a market downturn, but there are important rules that you need to understand so that you don't make costly mistakes.

00:14:37
First, your current year RMD, assuming you are already RMD age, is already fixed. It's already calculated. It was locked in based on your December 31st account balance of the year prior. If you've watched your IRA drop by 15 or 20 percent since the start of this year, I know the question you might be wondering, "Hey, can I just base my RMD on the current lower balance rather than the higher balance that it was on December 31st?" And the answer is no. The IRS doesn't care that your balance is lower right now. Your current RMD was calculated from the previous year's ending value, and that number doesn't change until the following year. The only exception to this, and this is an unusual situation, is if your current account balance has actually fallen below the amount of your RMD. In that rare case, you can just withdraw everything that's left in the account and avoid the underpayment penalty, but that's an extreme scenario and hopefully not where anyone is.

00:15:47
Now, here's something worth knowing from history. Congress has stepped in in the past and waived RMDs entirely during periods of severe market stress. They did it in 2009 during the financial crisis, and they did it again in 2022 during the pandemic. As of right now, there's no indication that Congress will do anything like that going forward. There are no hard-set rules for this, but just know that it has happened before, and it's possible that they can continue doing stuff like that in the future.

00:16:18
If you're in a position where you don't need the RMD funds to live on, right? You have enough income. You're just being forced to take money out of your retirement account, but you're like, "Hey, I have no need for it. It's just going to go sit in my savings account." There may be a case for taking your RMD later in the year. Your account balance may have recovered by then. Again, if it was hit by a market downturn in the beginning or the middle of the year, or if the relief that we just talked about is granted by Congress, let's say, because something highly unusual has happened during the year, you might not have to take it at all. That said, do not count on Congress acting. Take the RMD on your normal schedule unless and until something changes.

00:17:05
And while we're on the topic of RMDs, I have one critical sequencing point I want to make sure everybody hears. If you want to do a Roth conversion this year and you have at least reached your RMD age, you must take your RMD first. You cannot convert your RMD to a Roth. The RMD has to come out of the IRA before any conversion dollars can go into the Roth.

00:17:33
This is a rule that gets violated way more than you might think, and the IRS can definitely get you for it. There will be a paper trail via the required tax forms that are sent to them and to you by your investment custodian every year. So remember, take the RMD first, then convert. A lot of times, wherever your investments are held at, these investment custodians don't really flag this and stop you from making this mistake. I see people do it all the time.

00:18:05
In case you weren't aware of whether or not you're even subject to RMDs or when you might be, the Secure Act 2.0 raised the RMD age starting at 73 for those that were born between 1951 and 1959, and age 75 for those born in 1960 or later. So, unless you're already RMD age right now and taking RMDs, that's how you dictate when you will start. 73 if you're born between 1951 and 59, or age 75 if you're born in 1960 or later.

00:18:39
This next strategy doesn't get talked about very much, maybe because it's not applicable to everyone like a Roth conversion is, but it is incredibly powerful for the right situations. And this is called the NUA strategy, short for Net Unrealized Appreciation. It involves specifically company stock that is held inside a 401(k). I don't mean stock awards like restricted stock units or stock options, but again, very specifically stock awards where you have shares of stock or a stock fund that is comprised of your company's own individual stock in your actual 401(k) account.

00:19:23
If you don't own company stock in your workplace retirement plan, you can go ahead and skip ahead, but if you do, listen closely, very closely. Here's the basic idea behind NUA. Normally, when you take money out of a traditional 401(k), every dollar comes out as ordinary income and gets taxed at your regular tax rate at the time that you make the withdrawal, just like a traditional IRA. But there is a special tax treatment available under the tax code for company stock that's been held inside a 401(k).

00:19:57
Under the NUA rules, when you take a lump sum distribution of company stock from your plan, you only pay ordinary income tax on the original cost basis of that stock, which is basically the value of the stock when the shares were awarded and put into your 401(k). So if you have some shares that were put in there 10 years ago and the stock price was much lower 10 years ago than it is today, you only owe the ordinary income tax on the lower share price amount, not the full share price. The appreciation, so the difference between those two, the gain above that cost basis up until the day you withdraw the stock in a lump sum, gets the opportunity to be taxed at long-term capital gains rates instead of ordinary income rates when you eventually sell the shares.

00:20:56
So, depending on your tax bracket and income sources in the future, we are talking the potential for huge tax savings on possibly a very significant sum of money. Long-term capital gains rates range from 0% to about 23.8% for the highest of high-income earners. So this strategy is most beneficial to people that have company stock in their 401(k) and have very low basis in the shares, essentially meaning that their company stock has grown tremendously over time and they've worked at the company throughout those periods of massive growth.

00:21:37
Now, one really important note I want to make right now about this discussion on NUA that's extremely important is that I'm not going through these specific rules on how to actually execute the NUA strategy because there are timing rules as far as when you're eligible to do this strategy and rules on how you transfer the securities out of the plan, as well as how you roll over the rest of the assets out of the retirement plan, yada yada. We can save that for another episode. I just want you to know that the strategy exists.

00:22:11
If you want to look into whether or not this makes sense, you should contact a professional because not only does this need to be done very carefully, but the analysis to see if it makes sense is going to hinge on your entire retirement plan, which is very comprehensive in nature. So if you have employer stock in your 401(k) plan and you're really serious about exploring this strategy further, feel free to reach out to our firm in the show notes. You can schedule a free discovery call.

00:22:38
Okay, so back to our discussion on market volatility. Where does the market downturn create an opportunity here for NUA? Well, it's about resetting your cost basis in the shares. So here's an example. Let's say Marcus, age 48, works at a company and owns shares of company stock in his 401(k). He bought those shares over the years at an average cost basis of around $40 per share. The stock ran up to $70 per share during the last bull market, but now, with the recent market downturn, it's sitting at around $30 per share, which is actually below his original cost basis, right? He bought them for 40, and now they're worth 30. This is where most people just panic or get under the covers and start crying, but not us, right?

Theoretically, if Marcus sells all of his company stock inside the 401(k) and then immediately buys back the same shares at $30, he has effectively reset his cost basis to $30. So now that Marcus's cost basis is $30, if the stock recovers over the next few years, let's say back to $70 a share or higher, he has a much larger spread between the cost basis and the market value, meaning more appreciation that qualifies for the more favorable long-term capital gains rates if he eventually utilizes this NUA treatment and sells the stock. He's essentially set himself up for a better NUA outcome in the future if the stock does well.

00:24:17
Now, I want to talk about the other side of this, the panic move that destroys a good NUA opportunity. When markets drop, some people look at their company stock, and they just, they panic. They liquidate all of it inside the 401(k), and they move it to cash, or they reinvest it in some sort of different fund and re-diversify it. They tell themselves they'll probably buy back in when things stabilize.

00:24:43
It is very common for people to naturally look around at work or talk to colleagues at the water cooler and ask management, "Hey, how are things going?" and "Where's the company headed? How are things looking?" And if they hear a hint of uncertainty or anything negative, they think that the stock will do worse, and so they make these drastic moves. When in reality, that's just short-term thinking and is pure speculation, especially when you're talking about owning stock in a publicly traded company. And this is typical investor behavior, but it can be much worse when you're working for the company whose stock you own, especially if it's a lot. This is the classic sell low, miss the recovery mistake.

00:25:27
Timing the market doesn't work. It never has, and there's mountains of academic research to back that up. Missing just a handful of the best days in the market, let alone the best days of a single stock's return in any given year, can cut your long-term returns dramatically. And from an NUA perspective, if you sell your company stock at a low and you just move the proceeds to cash, and then you buy back in later at a higher price, you've permanently raised your cost basis, which reduces the benefit of NUA if you eventually utilize that strategy and take the distribution. Before you make any moves with company stock in a 401(k), especially during super volatile markets, talk to someone who actually knows how NUA works. Don't follow your colleague off of a cliff. This strategy has specific requirements, and it needs to be executed correctly, or you will lose the benefit entirely.

00:26:23
Moving on, let's talk about 72(t) payments, which is a more narrow topic, but it's very relevant for retirees. This refers to those who are taking early distributions from an IRA or think they might need to in the future, before age 59 and a half. So they use a substantially equal periodic payment plan in order to get funds out and avoid the 10% early withdrawal penalty. So quick background for those who aren't familiar. Normally, if you take money out of an IRA before age 59 and a half, you'll owe a 10% penalty on top of the regular income tax. But there is an exception under IRC Section 72(t), that's where the name comes from, that allows you to take a series of substantially equal periodic payments from an IRA without triggering that extra 10% penalty.

00:27:26
Once you start a 72(t) plan, you generally have to continue it for five years or until you reach age 59 and a half, whichever comes later. There are three IRS-approved methods for calculating the payment amount. Those are the RMD method, the amortization method, and the annuitization method. And just so you know, the amortization and annuitization methods typically produce the larger payments, which is why most people choose one of those. And don't worry, I won't bore you any further with any of the calculations between the three and how they all work.

00:28:06
When using a 72(t) plan or schedule, there are some changes that are prohibited. If these changes occur, the 10% penalty, and interest, by the way, is applied retroactively to all the distributions that you made prior to age 59 and a half. So yeah, don't do those changes. Here's the problem that can arise when we have a really volatile market. Let's say that you set up your 72(t) plan when your IRA was worth $500,000 and your annual payment under the amortization method is $25,000, which is 5% of the account. Markets tank. Your IRA drops to $300,000, and now that same $25,000 annual payment represents over 8% of your account. You're drawing down the IRA much faster than you intended, and if it keeps happening, you risk possibly depleting the account before the 72(t) period ends.

00:29:10
So you might think, "Uh-oh, I'm going to run into some trouble here." But there is a relief provision for this. IRS Revenue Ruling 2002-62 permits a one-time switch from either the amortization or annuitization method to what is called the RMD method. That's that third one. The RMD method recalculates your payment each year based on the current account balance. When the balance is lower, the payment is lower. That reduces the draw and the stress on your IRA when markets are down bad and gives the account a better chance to recover.

00:29:51
Here's what you need to understand about that switch. It's permanent for the rest of the original 72(t) payment period. You don't get to switch back to amortization or annuitization later, and any other change to the payment structure other than this one allowed switch is considered a modification of the plan, which will trigger the 10% penalty retroactively on all the prior payments that you took. That is a catastrophic mistake. Do not make it.

00:30:23
Here's an example. Let's say Daniel, he's age 58. He's been taking 72(t) withdrawals from his IRA for three years under the amortization method. When the market goes into a downturn, his required payments are now eating into his account balance much faster than he's comfortable with. So he elects to switch to the RMD method in order to reduce his annual payment. He still has to complete the original five-year payment period, and he cannot make any other changes during that time. But now his annual payment is much smaller and better aligned with what his IRA can sustain.

00:31:02
One more small nuance I want to mention regarding this 72(t) because it has come up in practice. Sometimes someone gets on a 72(t) plan, but then their financial circumstances change for the better, and they no longer need the money. In this case, you definitely still have to satisfy the 72(t) rules. That may mean continuing to take the distributions until the period ends, however long that is for you and your situation, which depends on when you started it.

00:31:35
However, like we discussed earlier, if markets go into a downturn and your traditional IRA balance goes down, you might be inclined to convert it to a Roth IRA. However, if you're currently utilizing 72(t) on your traditional IRA, converting it to a Roth could constitute a modification of the plan and screw everything up. So if you find yourself in a situation like this, I would be very careful. I believe there have been what we call private letter rulings in the past that have allowed people to convert the money that was not part of the actual 72(t) payment. But private letter rulings don't apply to everybody, and they're very expensive to get for yourself. So please don't rely on those. I know that was pretty nerdy, but it actually does happen. So, just a helpful tip for you.

00:32:28
All right, let's spend just a few more minutes on the mistakes side of this equation because I think this is just as important as knowing the opportunities during market volatility. Mistake number one that I want to cover is panic selling and going to cash. This is the one I see most often, and it's the most damaging by far. Markets drop, and people can't take it anymore. Plain and simple. They sell everything, or they move to cash, or change their stock investments to bonds, and they tell themselves they'll get back into stocks when things settle down. Or maybe they buy gold or something. But here's the thing. By the time it feels safe to get back in, you've already missed a significant portion of the recovery, usually.

00:33:11
For instance, the Dow Jones Industrial Average posted a single-day gain of nearly 3,000 points just recently, back in April of 2025. If you were sitting in cash on that day, you didn't participate in that at all. Missing just a few of the biggest updates in the market, which almost always directly follow the market bottoms, can cut your long-term returns by a third or more. And the data on this is very clear, and it's been replicated across dozens of studies. Timing the market does not work consistently. On the other hand, for non-retirement accounts, selling while investments are down and almost immediately buying back in in order to tax loss harvest and defer taxation can be useful. But again, I digress. We're talking about retirement accounts. More specific to that, non-retirement accounts, there can be reasons to sell. But again, we're usually not sitting on the sidelines trying to time the market to get back in, right?

00:34:15
Okay, mistake number two. Selling company stock in a 401(k) and destroying your NUA opportunity. We kind of covered this already, but it bears repeating. If you sell company stock at a depressed price and then end up buying it back higher, your cost basis is permanently reset upward. You've potentially cost yourself tens of thousands, maybe more, in long-term tax savings because of a short-term emotional reaction. So just be careful here.

00:34:46
Mistake number three. Thinking that you can claim a tax loss on your IRA. I want to be clear about this because some people genuinely believe this. If your IRA drops in value, you cannot claim a tax deduction for that loss. The Tax Cuts and Jobs Act of 2017 eliminated the miscellaneous itemized deduction that used to allow this in very limited circumstances. But that deduction now, in all cases, is gone. There is no tax benefit available for losses that you sustain inside your retirement account. Unfortunately, the government doesn't share in your downside the same way it will eventually share in your upside when you take distributions in the future. Go figure. Now let's step back and look at the big picture here. Market volatility is uncomfortable. Nobody enjoys watching their account balance drop. But for people who are doing proactive retirement and tax planning, a market downturn is actually a signal to lean in and not curl up in a ball and retreat.

00:35:55
If you've been thinking about things like Roth conversions, know that they can be more valuable while account values are down, pre-tax account values. If you own company stock in a 401(k) and the price has fallen below your original cost basis, talk to someone about whether resetting your NUA basis or your stock basis for the purposes of NUA makes sense. If you're on a 72(t) plan or think you might be in the future, and the draw on your account balance becomes uncomfortable because of market circumstances, understand that there is one and only one way to adjust that without triggering penalties. Above all else, try not to panic sell and time the market. Do not move to cash and wait for certainty that may never come. Stay invested, stay strategic, and focus on what you can control, which is the tax side of this equation.

00:36:54
And that's going to wrap it up for today's episode. If you found this valuable, please share it with somebody who's either retired or getting close to retirement and could use this information. And if you have questions about your own situation, whether it's Roth conversions, NUA, 72(t), or anything else that we covered today, we're always happy to chat. And you can reach out to us directly at planablewealth.com or retire-ishpodcast.com. Make sure to check out the various links we have provided in the episode show notes and subscribe to or follow the show on your podcast app. That way, you can get alerts each time a new episode drops.

Also, be sure to check out our free Retire-ish newsletter to get more useful information on retirement planning, investments, and taxes once a month straight to your inbox. The newsletter dives deeper into the topics we discuss on the show, as well as useful guides and charts that are available for download. As always, you can find links to the resources we have provided in the episode description right there on your podcast app, or you can head over to retire-ishpodcast.com/96. Thanks again for tuning in and following along. See you next time on Retired-ish.

00:38:22
Cameron Valadez is a registered representative with, and securities and advisory services are offered through LPL Financial, a registered investment advisor member, FINRA SIPC. Neither LPL Financial nor its registered representatives offer tax or legal advice. Always consult a qualified tax advisor for information as to how taxes may affect your particular situation. The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision. All investing includes risk, including loss of principal. No strategy assures success or protects against loss. Distributions from earnings are not subject to the 10% penalty if you qualify for an IRS exception. Please consult with your tax advisor for details. Distributions from a conversion amount must satisfy a five-year investment period to avoid the 10% penalty. This pertains only to the conversion amount that was treated as income for tax purposes. Contributions to a traditional IRA may be tax-deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59.5 may result in a 10% IRS penalty tax in addition to current income tax. A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59.5 or prior to the account being opened for five years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply. Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a RMD, required minimum distribution, in the year you convert, you must do so before converting to a Roth IRA. This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific tax issues with a qualified tax or legal advisor. Tax and accounting-related services offered through Planet Business Services, DBA Planable Wealth. Planet Business Services is a separate legal entity and not affiliated with LPL Financial. LPL Financial does not offer tax advice or tax and accounting-related services.