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What You'll Learn In Today's Episode:

  • Why end delivery is the key thing to focus on when sharing information.
  • The impactful difference between reciting everything you know and effectively communicating.
  • Where advisors often screw things up when explaining Roth conversions.
  • Situations to prepare Roth conversions for.
  • What clients love to know.
  • The simple steps to discussing Roth conversions with clients.
  • What tax tolerance is and why it’s important.
  • A value-add that clients like (and take home with them).
  • How to schedule appointments and prepare expectations.
  • How to take away some emotional fear that clients have.

Sometimes we can get caught up in our own heads in a way that keeps us from focusing enough on the end client delivery. So today, Matthew and Micah share how they have gotten caught up on their own ideas and discuss how this often happens when it comes to Roth conversions—and what to do about it. Listen in to hear how they navigate this issue, what kinds of communication methods help, and what you can do to ensure clients are better prepared to take advantage of Roth conversions.

When clients sit down and hear you recite everything you know about this topic, there will certainly be less understanding than if you knew how to communicate the idea succinctly and purposefully to them. Don’t miss the guys’ tips on how to do this more effectively and how to help clients make the most educated and informed decisions. You’ll also learn why less is often more, how to not overcomplicate things, and where many advisors screw things up.

Podcast Article:

5 Tips for Making Roth IRA Conversions Work For You

Are you setting yourself apart from the competition by making your clients’ lives easier?

As financial advisors, we may assume we have no role to play in our clients’ Roth conversions—but clients look to us to make their financial lives easier, and tax planning gives us an important opportunity to add value. In this article, you’ll find 5 powerful tips that can help any advisor leverage the power of Roth conversions to have an even greater impact on their clients.

Action Items in This Article

  • Visit theperfectria.com to sign up for the Perfect RIA Panel of Success on October 8th in Denver. You’ll hear Matthew Jarvis, Micah Shilanski, Ben Brandt, and Steven Jarvis speak about how they each dramatically increased the success of their practices while being able to work less.
  • Make a list of all the clients you want to do a Roth conversion for. Then, during your next surge cycle, set expectations by notifying all of them when you’ll be moving forward with the plan. 
  • Build a solid process for taking clients through a Roth conversion, and let everyone on your rockstar team know how to make the process as seamless as possible for your clients.

5 Ways to Make Roth IRA Conversions Work for You

Financial advisors already have a lot to consider, and a Roth conversion is just one more thing to add to the pile. But while a Roth conversion may not technically be your responsibility, preparing clients for it is one of the ways other top advisors are already delivering top value—and justify charging top dollar.

You don’t have to become a tax wiz to add more value to your clients’ lives. Just follow Matthew and Micah’s top 5 tips for integrating tax planning into your practice.

1. Keep It Simple

As with so much else in financial management, the way you communicate your ideas to your clients is the most foundational piece of the puzzle. This isn’t your opportunity to impress them with everything you’ve ever learned about conversions; the point is to help them make educated and informed decisions about their money.

Matthew Jarvis once had a client who managed teams of engineers. In his desk drawer, the client would keep a box of crayons and stacks of paper. If his engineers couldn’t draw the idea they were describing, it was too detailed, which told them they were going too deep too soon. It’s the same with your financial advice: If you can’t explain it on a single page, it’s too complex.

2. Speak to What Your Client Really Wants

Stop and ask yourself: why do you really want your client doing Roth conversions? For Matthew, it’s not just the ability to lock in the current tax rate—it’s also a form of insurance. He knows that at some point in a client’s life, for good or for ill, they’re going to need a large amount of money. And, as Matthew explains to his clients, “If we take out a lump sum all at once, you’re going to get killed in taxes.”

Financial planning is all about options down the road. Explaining these options sets the stage for clients to buy into a sound strategy, and they’ll know you’re looking out for their best interests at every step of the way.

3. Make Roth IRA Conversions a Selling Point

Given the important ways IRA conversions can impact clients like yours, you’d think more advisors would be offering basic tax planning. But you’d be wrong.

When Matthew asks his prospects, “When your advisor looked at your tax return, what did they say about your Roth conversion strategy?” he often hears, “Matthew, they didn’t look at my tax return, and I don’t know anything about a Roth conversion strategy.” Matthew simply nods and responds, “Well, that’s probably something we’ll want to look at if that’s OK with you”—but inside, he’s celebrating, because the client can see how much more they’ll get by becoming a client. That’s the kind of value tax planning can add, and that’s why you’re missing an important opportunity if your practice isn’t doing it.

4. Consider the Broader Strategy

For Micah, Roth conversions are really about diversification. He doesn’t know when the market will go up or down, so he hedges his bets by creating some diversification, giving his clients better options when they’re impacted by unanticipated events.

And, as Micah points out, it isn’t just about losses; there’s an important tax strategy at play when the client sells something, like a second property or a business. And this isn’t just theoretical: recently, when a client sold a real estate property, he was able to use money from his Roth IRA to help him offset the significant tax hit from the sale.

Did Micah know this opportunity would present itself back when he started those Roth conversions years ago? Of course not. But he knew something could happen, and whatever it was, he knew he wanted to be prepared for it. 

5. Set Expectations and Plan to Pay

Right off the bat, Micah likes to clarify the plan for his clients: “If your investments generate a tax bill, your investments need to pay the tax bill. It doesn’t need to come out of your pocket.” This makes the strategy clear—and it also gives the financial advisor some grace.

For example, let’s say you mistakenly have a large capital gain for a client this year, and you fail to make the estimated tax bill or effectively communicate the situation with your client. Well, great news: you’ve already taught your clients that if their investment generates taxes, that investment is used to pay the bills. And by reminding them at every opportunity, you know they’ll never lose sight of the plan.

Keep Learning

Let’s face it: Not all advisors are up to date on current tax law, and you should never offer services to your clients before you’re prepared. Whether you’ve been offering tax planning for years or you’re just getting started, it’s up to you to stay current on industry trends, resources, and regulations.One way Micah likes to stay up to speed is by keeping the most recent RTS tax guide handy. It shows current tax rates side-by-side with 2026 tax rates, so Micah can anticipate when his clients will move into a new tax bracket and help them plan accordingly. And, of course, The Perfect RIA podcast will continue to bring you cutting-edge strategies for transforming your business and offering even more value to your clients.

Resources In Today's Episode:

Read the Transcript Below:

This is The Perfect RIA, in case you didn’t know. Bringing you all the strategies to help your business grow. Are you happy? Are you satisfied? Are you hanging on the edge of your seat? Sit back and listen in while you feel the beat. Another myth bites the dust…

Micah Shilanski: Welcome back TPR nation to another amazing episode of the Perfect RIA. I’m your co-host, Micah Shilanski, and with me as usual, is the legendary Matthew Jarvis. Jarvis, what’s going on, bud?

Matthew Jarvis:   Micah, I’m just having a good time. We’re doing more and more guests on The Perfect RIA Podcast.

Micah Shilanski: Yes.

Matthew Jarvis:   And I have to confess, I catch myself referring to them as Micah as well. So, I’m like, “Oh Micah, I mean, George — George, tell me more about how this works in your practice.” So, I’m glad to be back here, Micah, with you, recording our standing podcast.

Micah Shilanski: I am very much so … it’s interesting Jarvis, one of the things I noticed this morning, so when I was getting up, I was actually listening to one of our podcasts that just dropped, and I was listening to it, but I listened to all my podcasts on 2x.

And so, we normally talk fast plus I’m listening to this thing on 2x. So, I’m getting in my rhythm in order to speak on podcast mode, but I’m like going super-fast and Kelly’s like you’re going way too fast in this.

And it kicked in there, it says, you know what? I’m listening to my own podcast in 2x thinking, that’s how fast I need to speak. So, this fun realization, that sometimes we get caught up on our own things and we’re not super focused on the end client delivery.

And this even happens to me right here. I get caught up in doing something in some routine and I’m focused on how I think it needs to go versus what is the biggest impact that’s going to be there for our clients. And this really ties hand in hand, in my opinion, to our conversation today, about Roth conversions, because the same thing can happen right there.

We can get caught up in our own world about Roth conversions and how it’s good, but we fail to communicate that effectively with the client and especially the client’s team as to why they should be doing this.

Matthew Jarvis:   But Micah, that’s an interesting point. So much of this goes back to being intentional. It’s funny Micah, advisors will come up to you and I all the time at conferences, wherever we’re at, and they’ll say, “Well, I’ve implemented search meetings,” but I do this twist almost like apologetic.

Like I have this twist to it and I’m like, “Great news. The whole point of everything we do is being intentional.” To your point, Micah, the speed at which you speak needs to be intentional. The way that you’re communicating needs to be intentional, specific to Roth conversions. This isn’t about let me recite to the prospect or the client everything I’ve ever learned about Roth conversions. That’s not the point.

The point is as always, help them make an educated and informed decisions and more often than not, less is more.

Micah Shilanski: That’s so much the case. How are we effectively communicating with this with the client at the level in which they need to understand? One of the other things we’re thinking about doing for a podcast is just making it simple; how often do we overcomplicate things? And Jarvis, you and I are kind of on the same page with this, same one page with this.

Matthew Jarvis:   Ooh.

Micah Shilanski: Is that if you can’t explain it on one page, it is too complex. My estate planning, how I diagram that, spoiler alert, that’s one page. My tax planning, it’s one page. My buckets of income in retirement is one page. Right now, you can say, “Oh Micah, that’s three pages, it’s three different things.”

Well, sure, if you want to look at it that way. But for one topic, it’s a one page discussion that we’re going to go through, because I need to keep it simple. And it’s not speaking down to clients in the slightest.

But we can jump so far into the nuances with things, we lose the ability to effectively communicate what the client needs to do. And that’s our job. Not only to help determine what the right answer is, but to communicate why the client needs to follow the right answer to get their goals.

Matthew Jarvis:   Yeah, and Roth conversions are a great example. As I’ve told this story, I had a client, he managed teams of engineers and he would keep in his desk drawer, a box of Crayola crayons like we all had back in school and sheets of paper. And they would bring in these big reports and he would say, “Here’s a piece of paper and here’s a crayon. Draw it out for me.”

And his point was, if you couldn’t get it onto a piece of paper with crayon, you were going too deep too soon. There’s obviously a case for let’s nuance out how far we can go on income before we hit Medicare premium increase. There’s a case for that.

The first thing though is we have to agree that principally, it makes sense to do a Roth conversion. Now, we can finesse whether it’s 23,212 or 24,418. That’s missing the point.

Micah Shilanski: So, Jarvis let’s do this, let’s go through a couple of concepts that are there about Roth conversions, where advisors in our experience kind of screw this up.

Now, why are we talking about this? Steven and I with Retirement Tax Services just did a webinar. We had a bazillion questions on Roth conversion, which are great, which is why we want to do it here.

It’s something that I’m going through right now with my clients. We’re accelerating a lot of our Roth conversions due the opportunity we have in the market. It’s a great time to be looking at that. So, it’s one thing that we’re doing.

So, let’s save our scripts if you will, to the end. So, teaser, you got to stay to the end and give us five stars to hear those scripts. But so, let’s save those to the end, but let’s go through some other concepts as to where it gets screwed up or why we do this.

Matthew Jarvis:   Yeah, and again, for our advisors that are not familiar with this, that find themselves sort of on the shallower end of the tax pool, if you will, which is no shame, we were all there at one point.

Micah Shilanski: No. Yeah, amen.

Matthew Jarvis:   And you may, by the way, want to stay there. You might say, listen, I’m just going to work with Retirement Tax Services, I’m going to read their newsletters, I’m going to use their value ads. I don’t need to become a tax expert myself. In fact, the June RTS newsletter’s on Roth conversions.

But Micah, let’s look like you said from not a philosophical level, but why are we doing Roth conversions. Micah, for me, at the end of the day, it’s mostly because I know at some point in a client’s life, they’re going to need a lump sum of money.

Micah Shilanski:           Yes.

Matthew Jarvis:   And I always tell clients, I hope this is for something fun, like buying an RV and traveling the country. It might be for something not fun, like paying for long-term care expenses or helping out a family member. In either case, if we take out a lumpsum here (I mean scripts) — if we take out a lumpsum all at once, you’re going to get killed in taxes. That’s the words I use, “killed in taxes.”

Let’s eat that proverbial elephant one bite at a time. So, the goal in my mind, Micah, with Roth conversions is kind of twofold. One, let’s pay the devil we know. Let’s lock in the current tax rate. Let’s also create options. Financial planning is all about options for down the road.

Micah Shilanski: I really like that. So, I do it a little bit differently for my concept of it. I’m on the same page, but again, this is about being intentional. So, I can hear a great idea from Jarvis and be like, you know what? It wouldn’t sound the same coming out of my mouth as he’s going to say it, but you know what? I’m going to take that intentionality, I’m going to tweak it for what works really well for me. And for me, it’s a diversification question.

Matthew Jarvis:            I love that.

Micah Shilanski: As funny as that sounds. But we talk about diversification all the time. I have a bucket strategy for diversification; cash, income, and growth. Why? Because I don’t know when the market’s going to be up or going to be down. I’m going to hedge my bets to create retirement income.

Same thing with taxes, I don’t know when the taxes or what the taxes are going to be in the future, I don’t. I wish I had that crystal ball. But because I don’t, I want to hedge my bets and I want to create some diversification to give our clients better options. So, philosophically, this is why I’m doing this — and now, this has worked very, very well for me in the past for things that I did not anticipate coming up in a client’s life.

And maybe, Jarvis, in your point where you say there’s going to be times in life where you need a big source of income or a lump sum distribution to come out, well, it could also be the case that the client sells something. Maybe they sell a second property, maybe they sell a business.

We had a client sell a business and when … I’m sorry, he sold a real estate property. When he sold a real estate property, we got it almost out a hundred percent tax-free because we had money in a Roth IRA.

We were able to play the tax bracket game, drop their income down there, and get a lot of money out tax-free to sell that capital asset, because we had diversification. Now, when we started these Roth conversions years in advance, we had not thought that this was going to be the opportunity that was there.

So, again, I like this philosophical concept of I want diversification, I want many different things out there, levers that I can play with to help control my client’s taxes when I need it.

Matthew Jarvis:   Now Micah, I want to take a step back again for our less tax-savvy advisors listening. And I don’t mean that with any disrespect. We all have these different areas of expertise. I think taxes should be a foundation, but for those that are less tax-savvy, this does not need to be elaborate planning where you say, “Well, I’ve got this multimillion-dollar transaction coming in year seven.”

This can be as simple as “Mr. and Mrs. Client, when you reach age 72, you’re required distribution’s probably going to be about $20,000 a year. Let’s just start converting half of that amount each year right now.”

So, it does not have to be super elaborate. It does not have to be down to the penny. But Micah, to your point on diversification, I think it’s borderline negligent if you are not talking about Roth conversions and seriously considering them every year with every client, especially clients over 59 and a half.

Micah Shilanski: Yeah, absolutely. This is something that’ a conversation that you need to bring up. Now, when Jarvis said that, keep in mind what he said, it’s negligent not to discuss it.

Matthew Jarvis:   Yes.

Micah Shilanski: he didn’t say not to do it, this is totally different. But these are things we need to be approaching with a client. And this is a dishwasher rule that’s right here. I want to get credit for the work that I’m doing, even for my clients that it makes zero sense for them to do a Roth conversion, and I have several right now.

Even though the market’s down, I’m not going to do a Roth conversion. Why? Because they’re retiring at the end of this year, we have a crap ton of non-qualified money and so, I’m going to use that money to live on. Their tax bracket’s going to be virtually zero. I’m going to do several hundred thousand dollars of Roth conversions, right?

It makes zero sense to do it today for them. I am still going to have that conversation because I want to get credit for the work I’m doing. They’re still going to have the conversation. I say, “Great news, we reviewed the Roth conversion. It doesn’t make sense for you this year. We’re still on track to do it this year, and here’s how it’s going to benefit you.”

Really, really important to say … I always use the term Roth conversion because that’s what they hear, that’s the technical term.

Matthew Jarvis:            Yes.

Micah Shilanski:          But I’m going to quickly tie it to why does it benefit them.

Matthew Jarvis:   Micah, that script that you went through quickly, that’s really all it needs to be. It doesn’t need to be here’s the 10-page report from the Monte Carlo generator that shows why it’s not … “Mr. and Mrs. Client, we reviewed Roth conversions and because of these three goals, it doesn’t make sense this year or alternatively, because of these three goals that you have, it does make sense to do.”

So, yeah, I’m having that discussion with every client every year. Even my clients who, you mentioned someone in a peak income year, doesn’t make sense. I’ve got client with a lot of non-qualified money, all of their IRAs, 100% are going to charity. Doesn’t make sense to do Roth conversions. The charity’s not going to pay taxes on it.

Cool, but every year I say “Mr. and Mrs. Client, as you recall, all of your IRA accounts are going to these charitable organizations, which congratulations, that’s really going to make a difference in the world. As such there’s no need for us to do Roth conversions.” So, that’s all it is. Just one line, two lines once a year, it’s coming up every time.

Micah Shilanski: Now, you might be thinking in your mind, that says this gets repetitive, don’t clients get annoyed about this? You’re bringing this Roth conversion conversation up all the time.

In my experience, no, they’ve never been annoyed with it. It’s a two-second line that we’re putting out there that clients understand and that we’re moving on. They love … Jarvis, and let me know if you have a different experience. But in my experience, they love to know that we are on top of it.

They love to know that we are constantly looking at this, even though if it’s conversation we have 17 times; beneficiaries, even though I bring up beneficiaries every two years with clients, they love the fact that I’m going through beneficiaries with them.

Matthew Jarvis:   Micah, this could be a variation of the imposter syndrome. One of our listeners will tell me what this is actually called. But one of the things we run into is … great, I’ve talked with 50 clients in a row about Roth conversions. Therefore, this 51st client, they’ve heard it 51 times.

No, it’s still the first time for them and by the way, especially with Roth conversions, it’s a common sort of throw-away thing in financial literature. Like, “Hey, you should be thinking about Roth conversions.” And so, it’s easy for the client to forget, “Oh, we did talk about that.”

The other place, Micah, is any prospect that meets with me, one of the questions: “When your advisor looked at your tax return, what did they say about your Roth conversion strategy?” “Matthew, they didn’t look at my tax return and I don’t know anything about a Roth conversion strategy.” “Okay, okay, well, that’s probably something we’ll want to look at if that’s okay with you.”

So, at a minimum you want to hedge in case they run into me.

Micah Shilanski: Right, amen. I say it all the time, yes, I will throw you under the bus in a heartbeat if you never pulled the client’s tax return. And there’s a very high probability that clients are going to end up working with us because this is … and not just because we’re looking at taxes, because the value that tax planning gives. This is something we have to do time and time again.

Alright, so we talked about the philosophical kind of stuff in there a little bit as to why to do Roth conversions. Jarvis, let’s talk a little bit more about how we’re going to explain this in meetings.

Now, you already said it at the beginning, just to reiterate what you said, is this is not something that we need a 97-page plan for. I’m sure I’m going to get some YouTube comment that disagrees with this, but this is something that we need a general plan for.

And my conversation with clients is going to be very broad. Is saying, “Hey, looking at your current tax bracket, looking at where you’re going to be in the future, I think we should do between X and Y as a Roth conversion. Is that okay with you?” And I give them a range. This is what I need to do.

I don’t say we need to do $25,692.12. I say “Great news. We need to do between 20 and $30,000 of a Roth conversion this year. Is that going to be okay with you? And then here’s my plan to pay the taxes.” Those are two parts to it. The first part is always, “This is the range in which I’d like to do a Roth conversion for.” The second part, after they agree to that, I immediately jump to how were we paying for this?

My general answer Jarvis, I’d love to know if you have a different way of approaching this with clients; my general answer is “Mr. And Mrs. Client, if your investments generate a tax bill, your investments need to pay that tax bill. It doesn’t need to come out-of-pocket.”

Matthew Jarvis:            Oh, I like that one. Yeah.

Micah Shilanski: So, this is how we have a plan to pay for it. And so, now, this gives me a lot of grace with clients. Let’s say that I mistakenly had a large capital gain for a client this year, and I failed to make an estimated tax bill or failed to effectively communicate that with a client. Let’s say that happened. Well, great news, I’ve already taught my clients that if your investments generate taxes, your investments get to pay the bills.

So, it’s already building a lot of good will for me and it gives me permission that they’re not going to be hit out of cash flow in order to pay for this.

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Matthew Jarvis:   Micah, I think a couple other big takeaways from those really simple, “Hey, if your investments generate a tax bill, your investments pay the taxes,” this is something that the client can remember when their adult child asks about it, when their spouse asks about it, or when their tax repair starts backing the bus. And really the bus isn’t even the right analogy; backing the 18-wheeler over the top of you.

And as each axle goes over the top of your head, and they’re saying, “Your advisor is this piece of junk and you owe this money in taxes,” the client remembers, “Great news. My advisor told me, Micah told me that if my investments cause a tax bill, my investments will pay the tax bill. I’m not worried about it.”

And then of course, Micah, the second step, which you talk about all the time is not only do we have that philosophy, that money is literally set aside in an account so that the client … and we’re reminding them ahead of time, “Hey, before you meet with your CPA, remember we did this Roth conversion. We’re going to need to pay $10,000 in taxes today, so we don’t pay 20,000 on some future day. And that 10,000, as you can see, Mr. and Mrs. Client is sitting right here in this account.”

Micah Shilanski: It’s such a brilliant idea. Just to have that effectively communicated with the client to let them know where those taxes are going to be. Now, let’s get into tax tolerance and remind me, I want to jump back into tax buckets, because this is really big in setting the stage.

But there’s something I call our tax tolerance. There’s a risk tolerance, which is a bunch of crap, but there is something that’s called a tax tolerance that I have with my clients. Where do they stand at the end of the year? I have some clients that no matter what, want to get a refund, they cannot stand the fear of owing the IRS money.

Matthew Jarvis:   Micah, would you in your experience say that’s the bulk of clients? In my experience, the bulk of clients-

Micah Shilanski: Yes.

Matthew Jarvis:   Even though they sort of understand that that’s an interest-free loan to the IRS, they would much rather get money back within a reasonable spectrum.

Micah Shilanski: Vast majority. If we can keep it somewhere between 800 and 1,500 bucks on a refund, clients are elated at the end of the year. We start going north of a thousand, 1,500 bucks, they generally want to start doing some different things, with holding because it’s too much money. That’s my experience. Know your own clients.

And that’s the point of this, know your client’s tax tolerance. I got some of them that says, “We’ll just mess it. I don’t want to pay anything until April 15th as long as it’s not penalty.”

Well then great news, if they got a $15,000 tax bill, then we’re just going to make sure their penalty-proof and we’re going to hold that money until April 15th and they’re going to mail a check on April 15th. There’s just some clients that are like that. So, know your clients, but you got to have a plan to pay those taxes.

Matthew Jarvis:   Yeah, and you got to have a plan to pay those taxes and you’ve got to have a plan for handling the tax repair even if the client is the tax repair.

Micah Shilanski: Yes.

Matthew Jarvis:   Especially if the client is the tax repair. That’s again, where we go back to these one-pagers, these illustrations that it’s, “Hey, here’s why we’re paying today. We’re paying today so we can …” I like to use, we pay the devil that we know. We want to get that set aside, the tax diversification.

Our friend Stan Morgan says, “Hey, do you want to pay $10,000 now or do you want to wait until your IRA doubles and pay 20,000 later?” And we can argue the nuances of that, but that’s how clients think. And so, we need to keep this as clear as we possibly can.

Micah Shilanski: One of the things that I’m going to do too, is when we go through and explain this with clients, the first thing that I’m going to do (and we talk about taxes), is I’m going to go over our tax buckets. Now, if you haven’t seen our tax buckets, we’ve done webinars and other things on it.

It’s basically a one-pager just because I write really big, where I draw four buckets and I explain the entire tax code as it pertains to our clients in four tax buckets. And I walk through how money works.

Matthew Jarvis:   Sorry to interfere. Who was … well, we won’t name names. There’s a tax expert in our industry and I want to say that he has like eight tax buckets or like 12 or 15, it’s almost like 11 by 17 with 27 different tax buckets.

Micah Shilanski: And they’re small tax buckets.

Matthew Jarvis:   They’re small. Yeah, and they’re these obscure things like life insurance held inside of an islet, that’s a bucket. Oh, okay. Thank you.

Narrow it way down. Sorry, so you have these four buckets.

Micah Shilanski: Yeah, narrow it way down. Nope, I do four. Right on the top, it’s ordinary income and tax deferred, then underneath that is capital gains and tax-free. That’s it. And I get through our quick little tax presentation. The reason I love the buckets is it’s simple.

Now, this is another good test. We talk about what’s a value-add that clients like? Clients take this home with them.

Matthew Jarvis:            Yes.

Micah Shilanski: When I draw it out, they’ll grab it and they’ll take it home with them. So, you know it’s a solid win. So, I’ll draw out my tax buckets for them, I show them what it is. And what I like about this Jarvis is it talks about anytime we take money out of a tax-deferred vehicle (IRA, TSP, 401(k), et cetera), it has a tax effect.

And I’m training my clients from the beginning — I even tell them this. “One of the reasons I’m showing you this, is I want you to understand anytime we do something with this money and it leaves this bucket, you owe taxes to the IRS, period.” So, that also subtly implies with the client, oh my gosh, before I do anything, I better call Micah to make sure this doesn’t have a negative tax effect.

So, I’m going to draw out my tax buckets and then after I draw out the tax buckets, Jarvis, I’m going to put the dollar amounts they have, the total. I’m not separating up Bob, Sue’s, IRAs, TSPs, et cetera. I’m going to put the total they have in each one of the buckets.

Now, in my clients, they’re always top heavy with this ordinary income and tax-deferred because they have TSPs, they have pensions, they have social securities. So, then all of a sudden, they’re looking at their diversification plan and they know that says, well, there’s four buckets, then mentally there should be 25% in each one. That’s just where our mental math goes. It just is.

Matthew Jarvis:            It is, yeah.

Micah Shilanski: And they’re like, “Oh my gosh, I need to do something about this.” Great news, we have a plan. So, they can instantly see that having all of this in one area is not a great idea. And then we can talk about our Roth conversion strategy.

So, it’s a simple picture diagram to explain it. Then I get the clients on board with it. Then after the clients are on board with it, I’m reaching out to the COI and making sure I’m effectively communicating that with the COI before we execute.

Matthew Jarvis:   Boy, Micah, there’s so many angles to take this. There’s how this ties into your center of influence strategy. Right now, as you’re listening to this in June or July, whenever this airs, this is a great time to reach out to all your accounts: “Hey, I’d love to pay for an hour of your time to get a better understanding of how you advise our mutual clients on Roth conversions.” And you can find out their tax tolerance.

The other one that comes to mind for me right now, Micah, every time I hear Roth conversion right now, I think of our mastermind friend, Michael Henley. He’s at Brandy Wineoak Wealth Management on the East Coast. And we were having our mastermind just this last week and Michael says, “You know what? From my super high-income, high net worth clients, I recommend they convert every single IRA dollar into Roth” and all the rest of us in the room we like stopped.

Like not every dollar. He says, “Million dollars, two million dollars, five million,” whatever’s converted all into Roth, pay the taxes on it. This, Micah, for me, speaks to the value of having masterminds to surround yourself with experts.

Because then he walked through, he said, “Hey, for these clients that are always going to be in the top income tax rate, their entire life, they’re never going to go out of the top income tax rate, why wouldn’t they pay? What do they stand to lose by doing the Roth conversion, getting it all tax-free, hedging against tax rate increases additional creditor protection, additional estate tax exemption, quasi.”

And so, it was a reminder to me, Micah, of the importance of surrounding yourself with other rock stars. I had never thought that one. I had always thought let’s use up the rest of this tax bracket. I had never thought to go into a multimillion-dollar client saying “Convert the whole thing.”

Micah Shilanski: I think it’s a solid idea, something to think about. Now, if you’re listening to this from an advisor perspective, if you’re an advisor you got 10, 15, 20 years left in the game, at least, being an advisor. Okay, is your tax bracket going to go down? That means your practice is sucking if that happens. I mean, just to be clear.

So, your tax bracket more than likely is going to continue to increase because your revenue’s going to go up. Okay, well, this is a hard push for saying, are you converting your 401(k) Roth IRAs into tax-free assets. That’s something you probably need to do.

Matthew Jarvis:   Micah, I want to pivot if we can just a little bit for advisors who again, are either very … they’re not experienced in tax or they’re in a kind of regulatory environment where this is considered tax planning and just compliance absolutely would not allow it.

What thoughts do you have for that group that either doesn’t know how to do any kind of tax planning, even stuff that we would consider simple or is just not allowed to do any tax planning?

Micah Shilanski: Alright, so step one, everybody should have the RTS (I’m actually holding up right now) tax guide on their desk. And the reason I’m holding it up is because I have it on my desk.

Matthew Jarvis:   Literally on your desk. Yes.

Micah Shilanski: Literally on my desk, and it’s in my conference rooms and it’s at my office desk and it’s everywhere. I told the team, hey, when there’s an updated one, this is the locations I want it for the entire team because this is really, really handy.

Number one, it gives me the current tax rates. Number two, which I love side by side, forgive me as I’m looking down at it.

Matthew Jarvis:   Yes.

Micah Shilanski: But side by side, it gives me the 2026 tax rates. Why are those important? Because that’s where taxes are going. Yes, Congress can change the law. Spoiler alert, they can change it at any time they want. But the law we have today says in 2026, your taxes will be higher than they are now.

And in fact, this goes into a script of what I’m talking to clients about, says, “Look, if you’re in a 22% tax bracket today, in three years, four years, you’re going to go to a 25% tax bracket automatically just by the change of a tax year, it’s going to happen. Would you rather pay taxes today at a lower rate or tomorrow at a higher rate?” And they’re like, “Well, clearly today at a lower rate.” “Great, let’s talk about a Roth conversion.”

So, Jarvis, I don’t know where the compliance line ends with some of these big institutions. For me, that doesn’t get too much into tax planning. That’s just general concepts of things we could do. Then the other thing that I don’t think gets too much into tax planning personally, but is the Medicare.

When they’re 65, what’s their IRMAA going to be? When there’s 72, what’s their IRMAA going to be? Why is 72 important? Because we have full social security kicked in, and RMDs are now into effect. Now, that we have both of those that are coming in, how is that affecting our current income that we’re seeing?

So, those are things for the IRMAA side that I would definitely be looking and say, how do we get ahead of this? I would say this, this is retirement income planning. This isn’t tax planning because I got to pay for this expense. It went from 150 bucks a month to $300 a month at 72, because this stuff kicked in, this is an expense I’m managing, this isn’t taxes.

Matthew Jarvis:   Now, Micah, I would add for our advisors that are like, “Wait, what is IRMAA and what do you mean about this tax rates and what do you mean about the 2026 tax law increases? All these different things.”

This is where and our good friend, Benjamin Brandt, who’s actually going to be with us on December 8th at XYPN for our pre-conference (five-star tip there, sign up for that), he said, “Hey, I don’t want to become a tax expert. I don’t want to have to master or IRMAA.”

He partnered with Retirement Tax Services to do this tax planning for his clients because he said, “Great, I know it’s important. I don’t want to spend the next 10 years to become an expert like Micah. I want to just have someone that’s an expert.”

Maybe you can find that expert in your local area. I’ve not had a lot of success with that myself. Retirement Tax Services with Steve and the CPA there, great resource. If you see, you’re like, “Ah, I see the value of tax planning, I just don’t see the path to become an expert myself,” find an expert. There’s no shame.

No client Micah, no client has ever told me, “Matthew, you’re such a bum that you brought in an estate planning attorney. Why didn’t you write these documents yourself?” It’s just never happened. Because we’re used to that.

You go to your doctor and say what you need; you need an oncologist because you have cancer. No one’s angry at their doctor because … and say for like the seventh referral, then you get angry, but you get my point.

Micah Shilanski: Yeah, exactly, right. So, these are the things, and actually, Jarvis, it’s quite the opposite — when I refer out to a good estate planning attorney, et cetera, they say, “Micah, thank you so much for this introduction. I really appreciate this, and being able to work this” because we were still the answer to their question.

They were one phone call away and we got them in touch with whom they needed to help. That’s a CPA, that’s an estate planning attorney, that’s anything in our realm that’s going to be there.

Matthew Jarvis:   Especially when you coordinate it. Where it goes bad and this is entire episodes, we’ve done entire webinars that are inside the backstage pass on this; where it goes wrong is when you say “Here’s a number, give them a call.”

Micah Shilanski: Yes.

Matthew Jarvis:   And that doesn’t work. When you say “Let me schedule appointment together, let me work with them, let me coordinate this together,” then it’s returns in spades.

Micah Shilanski: And that’s a huge five-star tip right there. So, I always schedule appointments with my COIs and my clients together. And for some reason if I cannot make that appointment, I will do a bomb-bomb and I will send it out in advance, outlining the expectations to the COI and to the client: “Hey, this is the client situation, this is what we’ve talked about. This is what I’m thinking about recommending. I’d love your thoughts on A, B and C. This is what we’d like this outcome of the meeting to be.”

And I go through all of that and I send it because I want to make sure it’s a five-star event for my client and for that COI.

Matthew Jarvis:   Oh, I love that. I love that. Micah, I think especially right now, of course, we record these episodes a few weeks in advance. So, maybe the market’s fully recovered by the time this airs. When the markets are down, it’s an especially good time to talk Roth conversions.

Micah Shilanski: Yes.

Matthew Jarvis:   And I would always … I know you and I share this soapbox — I would always, 99 times out of a hundred rather have the conversation about let’s do a Roth conversion now so that when the market goes up, that growth is tax-free. Than the alternative conversation that every other advisor seems to be having, which is let’s harvest our losses, let’s really lock those losses in. You don’t even know how much money we’ve lost. We can lock all that in and somehow-

Micah Shilanski: We can lock it in.

Matthew Jarvis:   Somehow, it’s free, I guess, I don’t know.

Micah Shilanski: Well, yeah, the first $3,000, I get a ride off into perpetuity on my tax return. This is amazing.

Matthew Jarvis:   Like a funny story on that, Alex, our junior advisor, great advisor, great advisor. He says to me last week, he says, “Jarvis, what if you had to make the case for lost harvesting? How would you do it?”

I said, “I can’t man.” He’s like, “What if you had to? Like gun to your head, you have to make the case for lost harvesting.” Pull the trigger, man. I’m not making a case for lost harvesting. That is a bad idea, in all, but the rarest of occasions.

Micah Shilanski: So, this is my only unicorn, because we used it on a client this last year for lost harvesting and we saved him a crap ton of money in taxes. Well, they had a highly appreciated stocks, et cetera, and they had a land that they had lost a ton of money on, but I don’t know how, because real estate only goes up in values. That’s really weird. So, they lost money on land.

Anyways, so it was totally weird. So, they sold the land, they had like $250,000 in capital losses and I immediately triggered some huge capital gains so we could get a ton of money out tax-free. So, now, that was not me encouraging tax loss harvesting though. This was, it happened to be the clients wish to sell the land.

Now, I have this $250,000 capital loss, what do I do with it? I want to use as much as that as I possibly can with my current tax law. I don’t want to spend that sucker for the next 15 years and hope I use it and they don’t get away with that law. No, I wanted to use up as much of it as I possibly can and take that money out.

So, that could be a unicorn. Again, I’m not going out and suggesting tax loss harvesting.

Matthew Jarvis:   Now, Micah, what we’ve done in our office with the market down, we had Alex go through contact …  we have clients that we do Roth conversions every year using up the rest of their tax bracket.

So, he contacted all those clients and said, “Normally, we do this in November, towards the end of the year. Because the market’s down, there’s a great opportunity, let’s do half of it now.”

Not let’s do 4,212, let’s just do half. We were going to do about 20, let’s do 10 now. In the fall, when we meet during the surge, we will do the remainder or look at doing the remainder. So, it can be really easy. Again, it’s got to just be these one-liners. It can’t be some insane, complicated thing.

Micah Shilanski: Yeah, that’s what you got to do. Again, you got to communicate with a client with a range. You got to have a plan for how you’re going to pay the taxes. And please understand, if they’re under 59 and a half, then you can’t use IRA money to pay that taxes. So, what’s your plan for that to make sure that the tax bill is going to be covered as we go through this. Those are your big things, and then communicate with the COI.

Now, if they’re their own tax repair, great, then make sure you communicate how this is going to show up on their tax return. You’re going to get an additional 1099-R that you need to report. Great news, in January, we’re going to send you a reminder about this. That’s our 1099 letter. These are things that we definitely want to go through.

We’re going through that right now with a lot of our clients encouraging them to do Roth conversions. Decent amount of them, we’re just doing the whole conversion now. You do 50/50 in my opinion on what’s going to happen. And if you are looking for a way to explain this, again, our webinar that we’ve done on the tax buckets, I talk about in 2008, when the accounts went down, how many people did Roth conversions.

I say this in seminars, I say this in webinar presentations, client facing, when I draw my tax buckets for them. Because when I look backwards, they can easily see that this was a great idea: “Hey, in March of 2020 when the markets drop 30%, did you do a Roth conversion?” “Oh my gosh, that would’ve been great because the markets recovered.”

When I look in history, it’s super easy to see that markets recovered. When I do it now, holy crap, the market’s down, it’s never going to recover. That’s the emotional thing.

So, I am always, Jarvis, going back to a historical example of why it made sense then to do a Roth conversion, then I bring it to today. Now, this is for a new person that’s never done Roth conversions before. Then I bring it to today. They’re like, “Ah, now, I see it makes a little bit more sense.” It takes away a lot of that emotional fear.

Matthew Jarvis:   Boy, Micah, there’s so many directions. You remember those books when we were kids, it was like the choose your own adventure and like jump to-

Micah Shilanski: Totally.

Matthew Jarvis:   I feel like that’s our podcast, because right now, I’m thinking about how you didn’t tell the client that the market was at the bottom. The market’s at the bottom, we have to convert.

The market’s at a discount, now, is a pretty darn good time to do the conversion. I’m never forecasting. I say, “Hey, eventually the markets will come back up and when it does it’s tax-free.” I’m not saying it’s going to be next month, it’s next year, none of those things. Alright-

Micah Shilanski: If it goes down again, the clients will say, “Well, what happens to the market?” Well, I don’t really get this question from clients, but it came up on the webinar. It says, “Well, what if the market continues to go down?” Good news, I might do another Roth conversion.

Matthew Jarvis:   Yeah.

Micah Shilanski: I can’t control it. I’m going to focus on things I can control. I cannot control the stock market. You can give me a call, alright, let’s chit chat, but short of that, I want to focus on things I can control and I can empower my clients in how they can control things and make decisions.

Matthew Jarvis:   Boy, I love it. I love it. Speaking of things that you can control, this podcast is all about taking action. So, as much fun as it is to listen to Micah and I banter back and forth about our beliefs on Roth conversions, let’s get started on some action items.

Action item number one, visit theperfectria.com or XYPN Live to get signed up for the Perfect RIA panel of success October 8th in Denver. Micah, myself, Ben Brandt, Steven Jarvis, we’re going to be talking about how we dramatically increase the success of our practice, the value that we delivered while most importantly, being able to work less. So, that is October 8th in Denver.

And then of course, Micah, we have another Invictus Mastermind that will be the first week of December. I believe December 1st and 2nd. So, get that on your calendar if you’re an Invictus member.

Micah Shilanski: Yeah, that was a ton of fun, a huge success at this last one we just wrapped up a couple weeks ago. And everyone that comes just says it literally transforms their practice. So, really excited to do another one. We’re also getting our May dates for 2023 in place.

Alright, another action item is make a list of all the clients that you want to do a Roth conversion for and look at accelerating that. Pro tip, you should have had this and if you don’t have it yet, this is how you’re going to do it next time: in your surge meetings, when you’re meeting with clients, this is when I’m flagging them for a potential Roth conversion.

Now, when I’m flagging them for it, it goes into a process, so all of our clients are going to have a Roth conversion process. It made sense for them or it didn’t, but I want to make sure that we looked at it for every single client.

So, we trigger a process and during surge, for people that are doing Roth or looking at doing Roth conversions. Now, have a list. Now, I could have said, “Hey, we looked at the Roth conversion for Bob and Sue. It did not make sense.” Well, then perfect. It’s marked in the system, it didn’t make sense. I looked at one for Jane and Jeff and it does make sense for them, I want to look at it year-end.

Perfect. Now, it’s flagged as a pending Roth conversion. Now, I can pull that list and now, I know who I need to talk to. And I even set my range. So, again, I’m doing all of my work in that surge meeting so it makes this … I’m just going off on a tangent — but I’m doing all of this work in my surge meeting because it makes everything else so easy.

I don’t need to go and recalculate how much of a Roth conversion do I need to do. When I was reviewing their taxes, I came up with the answer right then, and I logged it in the CRM. And so, now, I get to just go pull the list and say, great. I said it was a 20 to $30,000, there’s no reason for me to redo that math. If I was right then, I’m still right today, I’m going to move forward with that number.

Matthew Jarvis:   Well, Micah, you mentioned if you’re going to calculate the number, record it so you don’t have to do it again. Same is true if you said, “Hey, I’m not going to do it.” If your future self will trust your current self, that no means no, then that’s fine. That’s all the answer you need. If you know that your future self will say “Was Jarvis in Q1? Was he right about that?”

If I’m worried, I’m going to doubt that, I’m going to say, “Hey, we decided not to do a Roth conversion because one, two, three.” I’m trying to save myself the time of, “Well, let me pull the tax return up again. Let me look through all the notes, let me look through all the meeting notes. Let me get the emails with the CPA.” I want to eliminate those steps. If I have to touch something, I never want to touch it again.

Micah Shilanski: This is why I dictate notes afterwards. And my dictation is like one to two pages. And I want to document those decisions because if I want to pull something back up, I need to be able to quickly look at one note from that meeting and have all of my answers, not redo it. So, it turned into a long action item, it’s pretty short. Make the list of the clients that you need to do a Roth conversion and contact them about it.

Matthew Jarvis:   Well, and speaking of that list, you need to mention Roth conversions to every client every year. It can be a passive online, “Mr. and Mrs. Client, like last year again, it doesn’t make sense for you to do Roth conversions. This year, I’ll let you know if it changes,” on to the next thing.

Every single client, every year, dishwasher rule, needs to know that you intentionally decided to do or not to do a Roth conversion.

Micah Shilanski: Boy who knew, we talked about Roth conversions for like 30 minutes and all we got into was just the barely the surface. There’s so many other things we could talk about on this, but it’s all about taking action. Make sure you do that. Give us five-star on the pod, and until next time, happy planning.

Matthew Jarvis:   Happy planning.

Hold on before we go. Something that you need to know. This isn’t tax, legal, or investment advice. That isn’t our intent. Information designed to change lives. Financial planning can make you thrive. Start today. Don’t think twice. Be a better husband, father, mother, and wife. The Perfect RIA. The Perfect RIA.

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