Dave Ramsey says this group of Americans should avoid Roth conversions right now — are you making this costly mistake?

But for some, the tradeoff might not be worth it, according to radio host and finance guru Dave Ramsey. Here’s a closer look at the specific group of people he believes should avoid Roth conversions.

Ramsey’s advice

In a blog post on Ramsey Solutions, the veteran influencer writes at length about the mechanics and benefits of Roth conversions. In Ramsey’s view, the technique offers tax-free growth and potentially tax-free withdrawals later in life, which “might save you a lot of money in the long run.”

But it’s potentially a bad fit for one specific group: those within five years of retirement.

And the reason is simple. It’s because of the Internal Revenue Service’s five-year rule, which requires that you wait at least five years after your first Roth IRA contribution before withdrawing investment earnings tax- and penalty-free.

In addition, Ramsey argues that the value of a Roth conversion is greater when you have more time for the converted money to grow and compound, meaning that if you’re on the verge of retirement, you probably don’t have enough time to let that play out.

“It doesn’t make sense to do a Roth conversion if you’re just going to take the money out a few months later,” he writes.

In short, anyone who’s already retired or within the five-year range of their retirement might want to avoid Roth conversions, according to Ramsey. However, it’s also worth noting that this advice has received some pushback from financial advisors.

Critics disagree

Some financial experts have raised concerns about Ramsey’s Roth conversion recommendations.

In an article published by SmartAsset, Brandon Renfro, a Certified Financial Planner (CFP®), argues that the five-year rule often causes confusion, perhaps because many people misunderstand what the rule is intended for. He suggests the five-year rule is designed specifically to prevent people from circumventing the 10% early withdrawal penalty on withdrawals from traditional IRAs before the age of 59½.

“However, this rule doesn’t apply if you are 59½ or older,” he writes.

Meanwhile, financial planner and author David McKnight argues on his podcast The Power of Zero Show that Americans should also keep an eye on where taxes are likely to go in the future.

“The current, historically low tax rates won’t last, as the U.S. national debt is on track to hit $63 trillion by 2035,” he says. “If that were to happen, the U.S. Congress won’t have the luxury of keeping tax rates low anymore.”

According to their analysis, someone taking Ramsey’s advice and avoiding a Roth conversion could be setting themselves up for a larger tax-deferred nest egg and required minimum distributions (RMDs) in the future, when tax rates could be potentially higher.

So, who is right, Ramsey or his critics?

The good news is that you don’t need to answer that question yourself. Instead, you can hire a professional to help answer that question, taking into account your personal situation.

This is what pros are for

Instead of trying to forecast the government’s need for revenue in 2035 because of ballooning deficits, or even reading the tax code yourself to figure out which penalties apply at which age, you could just hire a professional to sort it out for you.

Delegating the task to an experienced financial advisor not only gives you peace of mind, but they are also fiduciaries, meaning they’re legally obligated to act in your best financial interest. And this goes far beyond just Roth conversions. A good advisor can help you navigate everything from Social Security benefits to estate planning.

Finding a financial advisor that suits your specific needs and financial goals is simple with Vanguard.

Vanguard’s hybrid advisory system combines advice from professional advisors and automated portfolio management to make sure your investments are working to achieve your financial goals.