Business Innovators Radio - Interview with Roy Snarr, Founder of Roy Snarr Retirement Solutions Discussing Roth Conversions

Episode Date: September 29, 2025

Roy Snarr specializes in asset protection, Long Term Care and retirement planning and is the host of Safe Money and Income Radio, broadcasting throughout central Texas. He is sought after nationally and helps people across the country with life insurance, long term care and guaranteed retirement income planning. Roy is a CFF (Certified Financial Fiduciary) a LACP (Life and Annuity Certified Professional) and a NSSA (National Social Security Advisor)destinations and is a proud member of MDRT: top 1% of licensed financial professionals in the United States. He is easy going, family oriented and loves meeting new people.Learn more: http://www.roysnarr.com/DISCLAIMER: I do not work for any type of government officeInfluential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-roy-snarr-founder-of-roy-snarr-retirement-solutions-discussing-roth-conversions

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of influential entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have Mick with us Roy Snar, who's the founder of Roy Snar Retirement Solutions, and we'll be talking about Roth conversions. Roy, welcome back to the program. Thank you so much, Mike. I'm excited to help share ways to not pay taxes for the rest of your life.

Yeah, you know, that's the underlying subtitle about Roth conversions because people are like, I've heard about Roth, but oh yeah, I want to hear about not paying taxes the rest of my life. That's a good thing. So first let's start off with what exactly is a Roth conversion. I think a lot of people know what a Roth IRA is, but what's a Roth conversion? Yeah, it's a great point. Most people are familiar with IRA, Roth, but the conversion is a little bit different. There's different terminology to there's backdoor Roth. There's all these different catchy phrases. But in simplicity, if you have an IRA and you wish to get that money to be tax free, you convert it into a Roth because the IRA money has never been taxed. You've received a tax deduction based on a certain percentage on your contributions, but then it's, in the future, you have to pay ordinary income tax, whereas a Roth, you pay the tax today, you put the money in, it's invested, and then whatever it grows into, plus what you put in,

is never taxed. So some people said, hey, I missed the boat on the Roth IRA, but I have a big IRA or 401K, or maybe they make too much money and they're not eligible to contribute to a Roth, so they have to contribute to an IRA and then convert it over. In the conversion process, you just take a small portion of the IRA or the whole amount, you pay the taxes on whenever you decide to convert today, and then moving forward, that principal balance plus whatever it grows to is forever income tax-free. Because we know that the biggest gold-starred by a Roth IRA is every dime that grows in there is tax-free.

So that's wonderful. And if you could turn back time and, you know, I don't even know, I guess that's what you're talking to clients about. Like, hey, if you had the choice and you want to do a regular IRA or 401k or a Roth, what would be the best choice? Well, obviously the Roth because of gross tax-free. But once someone has a big old 401k or an IRA and they do what you just described, now the benefit is all that money grows tax-free.

To me, from an uneducated person hearing you say, that, it makes me think of this question. That's wonderful. But how long before retirement, what's that break-even point, meaning this? If I'm 60 and I'm going to retire in X number of years and I do this conversion, well, I'm taking the taxes on the chin now. Do I have enough time to have money grow in the Roth to kind of compensate for what I just paid out? That's a great question. and there's also a rule to this as well by the IRS. It's called the five-year rule. So, for example, if you have zero Roth right now, you do not own any Ross and you decide to convert some of your IRA money or all of it, you cannot touch any of that interest for five years.

They make you wait. So a Roth conversion may not be ideal for someone who is going into retirement and they actively need to be spending that money down because they can't afford to wait the five years. So you've got to be cautious of that rule. The other thing you want to look at is how old you are when you convert it. And again, it's a best guess how long are you going to live? Because if you convert it a bunch of money and then you passed away, well, I guess your heirs are appreciative of it. But you kind of missed the vote on that. So the break-even point really depends on your rate of return that you're receiving. You know, unless you're at a 25% tax bracket, you get 5% growth. It'd probably take you around around 11 years to break even on that. But maybe you get 10%.

and it's half of the time. The way that we want to look at this on the ideal strategy is it's better to convert while taxes are historically low, i.e. now with this current tax bill, than it is in the future. And you want to do it systematically. You don't necessarily want to be hyperaggressive and convert everything unless you have a boatload of cash laying around to pay the tax bill. Most people want to do it over the course of time. There's two reasons, Mike, that you do this. Number one is a selfish reason. You want to do it for your sales. So you and your spouse can receive lifetime income that's tax-free or lifetime investments that they never pay taxes on.

But secondly, on the self-list side of things, it's for legacies purposes. Because with the Secure Act 2.0, if you pass away and then your wife passes away, your children or your closest kin or your heirs receive the money. But then they must spend it down in 10 years. If it's taxable, that's going to add towards their overall. income tax hits. So a lot of people will convert to Roth, not for their own purposes, but rather for a legacy purpose as well. That's a good point. So you want to have a balance there of, okay, how much do you have in total taxable money that is going to force you to have required minimum distributions

and how much do you have in Roth currently? We want to find a balance there because the biggest thing that people don't understand is that it's not just the taxes that you'll pay on the distributions in the future. It's the ramifications of those taxes. And what I mean by that is there are required minimum distributions on IRAs, not on Ross. So some people say, I'll just take my RMD out. But you know what also counts for taxes on RMDs is your EMA penalty with Medicare. So if you have a substantial portfolio, you may pay $5, $700 a month for you and your spouse on simply the Medicare Part B premium, not including your Part D premium. There's also ways that you can phase yourself out of potential deductions based on income because you're forced to take that money out of an IRA. So there's a lot

of other ramifications that are highly costly that people don't necessarily look at, which gives the Roth IRA conversion strategy much more of value in the long term. The other thing about that is you want to have a balance of where this money is going to be, where are you going to pay the taxes from? You have to pay it from an account. Do you pay it from your investment or do you pay it from a savings account? So these are some of the things that we really work through and walk through with people, show them the pros and cons of each solution. And there's six very ideal companies throughout the country that offer the most competitive Roth conversion strategy. It kind of reminds me of like when you play chess and you make a move and you leave your finger on it, look around and go, is this the best move? And then when you finally decide, okay, yeah, it is. Okay, now I'm going to take my finger off and there's my move. So like when you hear things like this, like, oh, Roth conversions, click, click, Google, let me do this. Wait a minute. There might be a lot of dominoes that could fall if you made the wrong choice. So A, get with someone like yourself that can help lay it all out for those options for you.

But then you had mentioned something that I want to go a little bit deeper on, which is doing it over time. So no matter how much money you've got into that 401k or IRA that you're going to convert out into the Roth, if you did it all at once, you might jump several tax brackets and incur a big tax this tax year versus having someone go, okay, hold up. If we wanted to do it over the course of several years so that you're just at the top of this one bracket but not going over, that's going to serve you best. How do you approach that? What we do is we use math as our friend hypothetical examples and we also use guaranteed examples as well. Because to your point, it really depends on how long we live and what are our goals? I mean, if a client has a goal to just blow

through all the money, not give their errors anything, that's going to kind of skew the opinion on how much we should convert and how aggressively. The other thing to keep in mind, too, on this time frame is monitoring the government. Because imagine if we get news that after this tax bill comes to its fruition, that taxes are going to go up by 28% on all brackets, hypothetically. I mean, who knows what can happen? Well, you know what? If we got that news, we probably should convert a little bit more aggressively. And right now with this current tax structure, most people are trying to convert within a seven to 10 year timeframe. That's the average that we see because that's manageable enough to pay the taxes, but it also helps

insulate them from potential future changes. And the biggest question you ask yourself, do you think taxes will be lower or higher in the future? If you think they're going to be higher, which is 110% of the responses that we get, would you rather pay taxes on a much larger balance or a much smaller balance? And so that's some of the conversations that we have to break this down. But there's also a unique strategy that has to come in the play. This is something that a lot of people miss out on. They are not educated on it. And I'm going to share it with every one today. You don't want to be doing Roth conversions, ideally, in a investment or an account that has potential loss. Let me give you an example. Let's say that you had a million dollar portfolio

and you converted 500,000 of it to a Roth and you had plenty of cash to convert it. But then the markets tanked 30%. Uh-oh. You're, you still have your million, but now it's worth 700,000, but you had to pay tax on that half a million. You've lost money. You've paid more and you should have converted it when the markets were down, right? But can we predict when they're up or down? Luckily, there are strategies out there that there are companies that will say, look, if you park the money with us, you can have it where there's absolutely no fee.

You're going to average between 4% and 8% a year in return because there's no fee and there's no risk. So you're not going to have as aggressive of an option to have. the money grow, but there's no risk allowing you for peace of mind during that conversion strategy. Additionally, insurance companies are the only companies that offer annuities that give you a bonus. A lot of these companies will give an upfront bonus of anywhere between 5 and 15%. And that money can be used to help justify the conversion of paying the taxes and you can partially convert along the way. Those strategies aren't for everyone, but it's at least worth becoming educated.

about it because when you do Ross, as we mentioned, it's rare you're going to do the whole thing. You're going to do a portion of it. And this portion, if you can have it protected, not pay a fee, still average two to three times a historical inflation rate, have control of your money, have liquidity features, but not lose anything and still get decent returns. It can be a very ideal strategy with a small sliver of the portfolio. And that's what the mainstream is not promoting is these types of solutions because they're mainly accessible to specialists like myself who are in the asset preservation and distribution phase. Most advisors are asset accumulation experts. We are decumulation experts and preservation experts. And there's a whole other set of strategies, a whole other set of

specialties that go along with that. And that's where we focus on. And we teach classes all over the country about this. And people are blown away. They've never heard of it. And these strategies that have been around for literally some of them, you know, 50 years, 100 years by these companies that offer them, but they're just not mainstream. Yeah. That's a good point. You know, and something else that you mentioned that I want to get a little clarity around is like, you know, when should you convert?

And it depends on how long before retirement the Roth has a chance to grow. And what if it grows at X percent? So here's a question. Isn't it true that a Roth is just kind of like a, shell kind of account so that whatever's in there grows tax-free, but there are myriad choices of funds you can choose inside of that. So it's not just I have a Roth, it earns X, it's I have a Roth account and inside of that I've got it invested through whatever, you know, fund. How does that work? Because it's not just a matter of what's today's rate of return on a Roth. Great question. A lot of

people mix that up as well. They say, well, I have a Roth, but I can't do anything with the investment strategy because it's a Roth. No, the best way to think of it is a five-gallon bucket from Home Depot or wherever, Harbor Freight, they're cheaper there. You get a five-bucket. That bucket is empty at the moment in this example. That bucket is a Roth IRA. You can have another bucket right next to it that is an IRA. The IRS, the government, gives you the opportunity. It gives you the opportunity to invest whatever you want inside of that bucket. So for example, maybe you throw in some stocks. Maybe you throw in some mutual funds. Maybe you throw in some Bitcoin. Maybe you throw in some gold. Maybe you throw in an annuity. It doesn't matter. As long as it's within that bucket, that is the

tax code it's pertaining to. So you have a multitude of different options to put inside that bucket. Yep. And while it's in, as long as it's in that bucket, it's growing tax-free. So that really is a good clarification because I think there's a lot of people that go, oh, boy, I'd like to even own some Tesla stock. You can buy Tesla stock inside your Roth IRA. You just, you know, make that choice. 100%. Yeah, it's just you have a lot of different flexibility options with that. And again, it comes down to diversification. And the only thing that's going to protect you from downside risk with the ability to gain and have access to your money on a very controlled basis is using an annuity. And everybody's like, oh, annuities are bad.

Really? Are you going to give back your social security check? Are you going to stop your patient check? They're not bad. Are there good ones and bad ones? Sure, just like saying mutual funds. I mean, I think there's over 66,000 different types of mutual funds. They're not all good, but there are good ones. And the same thing applies to annuities where people, you may not want an annuity.

You may be very risky. But if you're going to be converting money, why in the world would you want to convert it? And if it's involved in the markets where you can potentially lose a ton and then overpaying the tax structure. It just doesn't make sense to me. So having diversification is key. Having an open mind to other strategies, just because you've been working with somebody for 5, 10, 20 years,

it's okay to look on the other side of the bus, right? I do this analogy with people. It's almost like you're on this bus and you're in retirement, but you're only looking out the left side of the window. You never looked out the right side to see what's going on. The best view is a topical view, so you can see everything going on at once. And that's what we want to provide is that topical view where you can still have money

in the markets, which I'm a big believer in, and you can still have money in safety and conversion strategies that just make mathematical sense. It's beyond opinion. It's just math and science that proves it. You know, I know that there are limitations to Roth. Like every year you can only contribute X, and if you earn over X number of dollars, then you can't even, you know, set one up. what are some of those variations for someone that is like high net worth,

you know, because you mentioned there's some options that they can still take advantage of it potentially. Correct. I mean, there are limits to opening up a Roth. It depends if you're doing married or single. Like if you're single, it's $150,000. If you make more than that, they start phasing out what you can actually contribute to it. And it's completely phased out at $165 in income.

Again, RMDs can count against this. as well if you're at that age. If you're married finally jointly, it's 236,000 is when the phase out starts and then it's completely phased out at 246,000. But regardless, you can make a million dollars a year, contribute to an IRA and then convert it to Roth. There's no limit currently on that. So that's where this quote unquote backdoor Roth comes in. But all it is is you're just converting it. And essentially it's the same thing, right? It's the same tax bill. And so that's what we help a lot of people that are more affluent in the marketplace. Now, if they don't have any Roths whatsoever. They just have brokerage accounts and savings, then yeah, you're out of luck,

unfortunately. There's something you can do. But that's why it's important if you don't have a Roth, even if you opened one up at a very inexpensive brokerage house for the bank and just start one, get that five-year-clock going. Maybe you put 500 bucks into it. Doesn't matter. Get that five-year clock going for yourself. And then you can talk about starting to do partial conversions and mitigating that risk. You know, I know you talked in a previous conversation about just the help you give people just free advice because they don't get it anywhere else. And I know that a lot of times advisors don't really give input on 401K allocations because it's like it's kind of out of my hands.

But here's a question for you when someone's like, let's say a relative of yours, gets their first job out of college and they're going, hey, Uncle Roy, they're giving me all this paperwork at HR to sign and set up this 401K. What do I do? and how do I, would you advise someone these days to set up a 401K or just go, nope, don't even do it, just set up a Roth and let it grow, you know, for the next 30, 40 years? Well, here's the advantage of a 401K is that you could be making $10 million a year and have the same contribution enjoyment limits.

And the limits are significantly higher than what you can. Because if you're over 50, the most you could even put into a Roth is $8,000, right? So you have limitations even if you do qualify. But with the 401K, it is literally significantly higher. They have catch-up periods. If you're over 50, it's 31,000. I mean, under normal circumstances, it's 23,500. Now, given not everyone has the disposable means to do so,

but the number one thing I tell people as I say, look, I don't give specific tax advice. I'm not at CPA. I don't give specific advice on ERISA-regulated plans or which shares or stocks to buy within your 401K. But let me ask you a conceptual question. Would you rather pay taxes in the future that we don't know how much it's going to be on this entire 401k balance with the money

that you put in plus all of its great growth that hopefully will happen or we'd rather pay the taxes today get it over with and then everything grows tax free in the future because most employers today offer a Roth 401k and that is the sweet spot that's the goal that's what I have done with my own personal company I switch my 401k plan over to a Roth 401k because I would much rather pay the taxes today, get that over with, and then go ahead and have a tax-free bucket in the future. Now, you have to balance it out with your CPA. Sometimes you need to do the regular 401K, but ask the employer, do you offer a Roth 401K? And oftentimes, they'll allow you to do a little bit of both. You can contribute to a traditional IRA, or sorry, a traditional 401K and a Roth

401K. Sometimes they let you do both. That's a good point. Yeah, and there are options that are available to us today versus 20 years ago in the workforce where it's like you just have one choice. Do you want to afford care or not? Now employers might offer that and that could open up some great doors. So really, really great conversations around the benefits of Roth. Should you convert? When you should you convert? What does it do for you now, later and your legacy for taxes? So that's really, really great clarity you brought around this, Roy. If someone is wanting some options or what would it look like for them, I know that you provide. great educational content.

What's the best way that they can learn a little bit more and also reach out and connect with you? The best way to reach out to me is just by Googling my name, Roy Snar. You'll see my company, Roystar Retirement Solutions, which is Roy Snar.com. And on that site, we have tons of resources. We have a YouTube channel. We have a free information form. If you just want to talk with us to try to get a strategy put into place or just at least see an example. I mean, I love just showing people examples.

There's no obligation or commitment. We're very fortunate and blessed that we help so many people that we're not relying upon or chasing people down. I own the company. It's family operated. There's no quotas or deadlines here. We're not a sales team. We're an educational team. And we help so many people with education when the timing's right.

And if it makes sense, great. We'd love to be the person that helps you. If it doesn't make sense, that's okay, too. There's plenty of other folks that we get to help. Awesome. Well, Roy, thank you so much for coming. it back on. It's been a real pleasure of chatting with you again. Thank you so much, Mike.

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