SmartAsset’s Renfro urges low-income earners to execute Roth conversions before year-end
Brandon Renfro advises investors to verify if their current tax professional offers tax planning services, as not all Certified Public Accountants, Enrolled Agents, or Certified Financial Planners provide this specific capability.
SmartAsset financial planning columnist Brandon Renfro has advised individuals with low income to consider executing Roth conversions before the end of the calendar year. Renfro noted that low-income periods present a strategic opportunity to convert funds while potentially benefiting from lower tax brackets, but emphasised that the transaction must be completed within the current year rather than during the subsequent tax filing season.
The core of Renfro’s guidance centres on the distinction between tax preparation and tax planning. He described tax preparation as a rearward-looking service where professionals file returns based on the previous year’s data. In contrast, tax planning is forward-looking and requires estimating future income to determine the optimal timing and size of a Roth conversion. Renfro warned that while many tax preparers are skilled at filing returns, they may not offer the strategic planning required for these specific calculations.
Renfro highlighted that possessing specific professional credentials does not guarantee a practitioner’s ability to assist with Roth conversions. He identified Certified Public Accountants (CPAs), Enrolled Agents (EAs), and Certified Financial Planners (CFPs) as professionals with relevant training, but cautioned that many CPAs work in auditing or bookkeeping, and many CFPs do not prepare tax returns or offer tax planning services.
The columnist advised readers to verify whether their current tax preparer provides tax planning services. For those who do not have an existing relationship with a tax professional capable of this analysis, Renfro suggested seeking a financial advisor who can estimate future income and help determine relevant tax rates. He noted that finding a suitable advisor can be facilitated through matching tools that connect clients with vetted professionals in their area.
While Renfro’s column is a paid piece for SmartAsset, he clarified that he is not a participant in the SmartAdvisor Match platform. The advice provided is general in nature, and Renfro urged readers to verify specific tax implications with a qualified professional, as tax laws are subject to change and individual circumstances vary.
