Roth IRA Conversion 

There is a flow in the video. Paying 40k early is missed opportunity cost. If 40k is removed from 100k, the distribution from Roth may not be same as 100k mentioned in the video. Otherwise, a compelling argument for Roth conversion for possible higher taxes in future.

This is a very two dimensional view. You're not even looking at the opportunity cost of paying $40k today. $40k * 10% return (2% lower to account for dividend payouts) for 20 years is $269k. Obviously everyone situation will vary but the opportunity cost needs to be included at a minimum or you need to lower your ROTH IRA from $100k to 60k to pay for the conversion.

JOhn, informative video, thanks! However, the background was making me dizzy!

When doing a SEP IRA to ROTH IRA conversation, do you owe taxes only on the SEP IRA contributions or the entire amount within the account?

I did Roth conversion. Before I started I looked at 12 ways to convert/not convert. For the most part age is 60+ to do Roth conversion or IRA withdrawals. Retirement date for one or both and when does social security start for one/both. Pre 65 the target is a tax bracket and post 65 the total income (pension, SS, annuity, passive income, other). For me/us it is going to be about 10 years. Staying inside the Medicare penalty level and trying to manage the tax brackets. The last/remaining 2-5 years will let us finish our IRA to Roth conversion inside the 12% tax bracket. A lower tax but also our dividends are not taxed now. We expect to let the Roth grow to our ends - the kids will pick this up for a tax free distribution regardless of waiting out the new 10 year tax law. Pay taxes from the conversion or pay the tax from another account. If the other account does not have the money for the tax bill - rethink the bottom line. Taxes on the Roth conversion are paid from your balance. Pay tax from your bank account or from the Roth funds - the tax will be paid. The taxable account is a tax free inheritance regardless of paying or not paying the Roth conversion tax. Don't convert and the IRA or Roth side is going to be taxed to you for the rest of your life and then the balance is taxed to your inheritors

The calculations shown are totally wrong. Here is why. 12% compound over 21 years is 1080.384%.. and some more decimals. John, retiree 1. 100k in Roth over 21 years of compounding, John ends up with 1,080,384 tax free. John had to pay 40k from discretionary funds to come up the taxes he owed for the conversion. So he paid upfront 40k with after tax money. Jack, retiree 2. Jack sees what John does and he thinks that he can outdo John. He decides to not do the IRA conversion, instead, he puts in HSA (yes, he is enrolled in a an HSA plan) and in Roth an extra 10k in each of the next 4 years. So, after 21 years of compounding in his IRA, Jack has 1,080,384$ taxable money, for which he pays 20% income tax, so over years of withdrawing he will net $864,307. But he also has in Roth and HSA accumulated wealth: Starts with 10k and ends up 11200 after year1. Starts year 2 with 11,200 from last year+10,000 this year contribution=22,200. End of year, 12% growth, ends up with 24684. Year 3: starts with 24684+10000=34684 and ends up with 38946. Year 4: starts with 38946+10000=48946 and ends up with 55939. After year 4, his 40k are fully invested and he has 17 more years of compounding: His 55,939 after 17 years of 12% compounding will be $384,080 in tax free money. So total net for Jack, 1,248,347$ and he paid upfront, as John did, 40k, but instead of doing an IRA conversion, he invested in tax free accounts (HSA and Roth IRA) and netted an extra 248k compared to John. Oh, but you will say, what if Jack has already maxed out his Roth and HSA contributions for those years? Well, in that case, Jack could have invested an extra 10k in a 401k account (assuming Jack has not maxed it out) for the next 4 years and after 12% compounding over 21 years he would have the same $384,080 of taxable money. Not to mention the taxes he saved when contributing 40k to the 401k. In retirement, at a rate of 20% taxes, in this case, Jack would net 1,210,030$, slightly less than in the previous scenario, still better than doing the Roth conversion. But what if the 401k is also maxed out? In that case, a brokerage account upfront investment of 40k with a 12% annual return, taxable, would still make more sense. So the Roth conversion that the presenter suggests does not make much sense. Careful: starting with more seeds most of the times is more helpful than having a taxed crop. Presenter seems to be more familiar with giving sales pitches to novice investors, while simple math, not his domain. Piece of advice: if you value your audience, come up with a scenario that makes sense financially.