Roth Conversions & Minerals

Since contributions to a Roth IRA grow tax-free, some investors opt to strategically convert their traditional IRAs into Roth IRAs to preserve future wealth and allow for tax-free withdrawals in retirement. This can be a beneficial strategy if paying taxes now is a feasible move based on your personal financial and tax situation, and if you believe your account will grow significantly with time — which would lead to paying larger taxes later on in a traditional IRA.

Minerals as a Depleting Asset

With mineral rights investing, a Roth conversion can offer additional benefits. Since mineral rights are considered a depleting asset, they can be valuated at a lower rate. Additionally, since the fair market value of mineral rights is determined based on SEC and IRS standards that only take producing wells into account (not wells that are anticipated to be drilled in the future), a third-party appraiser may value them at a much lower rate than what they were purchased for and determined to be worth by the buyer and seller.

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