medium · Certified Financial Planner Estate Planning
Voss, age 62, has just inherited 2,500,000 from a distant relative. He currently has800,000 in his employer's 401(k) and a $300,000 mortgage at 7%. Voss asks his planner if he should pay off the mortgage immediately or maximize a Roth conversion.
According to the CFP Mindset decision hierarchy, what should the planner's next step be?
- Calculate the break-even point between the mortgage interest saved and the potential Roth growth.
- Request a meeting to quantify Voss's retirement goals and review his current cash flow statements.
- Advise Voss to maximize the Roth conversion to take advantage of his current tax bracket before RMDs begin.
- Recommend paying off the 7% mortgage first to secure a guaranteed return on investment.
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