Vanguard warns Americans get Roth conversions wrong. Here’s a more precise strategy for current investors

Core Insights - The primary question for investors considering Roth conversions is whether their future tax bracket will be higher than their current one [1] - Vanguard's analysis indicates that this approach is incomplete and introduces the breakeven tax rate (BETR) as a more precise model for evaluating Roth conversions [2] BETR Approach - The BETR represents the future tax rate at which a Roth conversion has no financial advantage or disadvantage [3] - This rate is calculated based on assumptions about portfolio growth, highlighting the opportunity cost of taxes paid today [4] - An example involving a high-income investor named Jill illustrates the BETR concept, where her current marginal tax bracket is 35% and she expects it to fall to 24% in retirement [4]