Turning Market Volatility into a Tax Planning Opportunity

Market volatility is uncomfortable — but it can also open the door to valuable planning strategies. While most investors see a pullback as a time to retreat, it can actually present a powerful opportunity to reposition assets for long-term advantage. A 10% market decline doesn’t just mean lower portfolio values — it could also mean paying income tax on 10% less money when executing a Roth conversion.

Here’s why you should consider this move during a market dip:

Tax Efficiency

• Converting traditional IRA assets to a Roth IRA when markets are down allows you to move more shares at a lower price, which reduces your immediate tax liability.
• If you're in a lower income year — such as during early retirement or a career transition — you may be able to convert assets while staying in a lower tax bracket.
• With potential tax hikes on the horizon, locking in today’s known tax rates can be a smart long-term move to manage lifetime tax exposure.

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Long-Term Growth Potential

• Once converted, all future growth and qualified withdrawals from the Roth IRA are completely tax-free, which can significantly enhance your retirement savings.
• A market recovery after conversion amplifies the benefit, as all the rebound in value takes place within a tax-free account.
• Over time, a Roth IRA adds valuable tax diversification, giving you more flexibility to manage taxes in retirement.

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Retirement Flexibility

• Unlike traditional IRAs, Roth IRAs have no required minimum distributions (RMDs), allowing your money to grow tax-free for longer.
• With no forced withdrawals, you gain greater control over how and when you take income in retirement.
• A Roth IRA can be particularly useful to fund early retirement years before Social Security or pension income begins, reducing pressure on other accounts.

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Estate Planning Benefits

• Roth IRAs can be passed on to heirs income tax-free, making them an efficient vehicle for legacy planning.
• By reducing the size of your taxable traditional IRA, you also reduce the future RMDs that could inflate your taxable income.
• For beneficiaries in higher tax brackets, inheriting a Roth IRA can significantly reduce their tax burden compared to receiving traditional retirement accounts.

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When markets drop, it’s natural to feel hesitant — but thoughtful action during periods of volatility can create long-term benefits. A well-timed Roth conversion turns temporary discomfort into a lasting financial advantage.

Whenever you're ready, we’re here to help:

Managing your own finances can be overwhelming. If you’d like to experience the benefits of working with a trusted advisor we invite you to schedule a no-obligation phone call to explore how working with Ark Royal might enhance your wealth and peace of mind.

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2700 Wycliff Road Suite 360

Raleigh, NC 27607

Tel. 919-710-8665
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