TRANSCRIPT:

Hi and welcome back to the fifth and final video of this series called What To Do During a Recession or Market Pullback. My name is Greg Vojtanek of Fade In Financial. Today I‘m going to be talking about tax planning.

Two main things. Do you have a traditional 401k or IRA? If so, there’s something called a Roth Conversion, or you may have heard of something called a Backdoor Roth, which basically means you can convert those assets or those accounts, or some of the money in those accounts, to a Roth IRA. Now the amount that you convert to a Roth IRA will be taxed. So, during this time, you might want to think about doing this while the valuations on your accounts are low because the market has pulled back or we are in a recession. So if you convert that amount to the Roth IRA, it is worth much less now. Therefore you’re going to be paying fewer taxes this year.

Also, kind of going along with that, if you are laid off, or you haven’t found a lot of work this year, you might be in a lower tax bracket this year. Which, again, goes back to a Roth Conversion strategy because you’re going to be paying fewer taxes. Or you might now be eligible to contribute to a Roth because there are income limits. Now is a year where you aren’t working as much and, therefore, you might be able to contribute to a Roth this year.

Lastly, do you have any assets with a loss? If so, consider selling those strategically for a loss this year. It’s known as Tax Loss Harvesting. You’re purposely selling some, let’s say for example a stock, at a loss because that will now reduce your overall tax liability for the year.

So just some things to consider. Everyone’s different. I always say this. So do what is right for you. But thanks for watching this five part series called What To Do During a Recession or Market Pullback. I hope you found this helpful. Thank you very much for watching.