Ed Slott, Founder of IRAhelp.com, joins The Final Round to discuss how the election could impact your retirement savings.

Video Transcript

SEANA SMITH: Welcome back to "The Final Round." Time for our retirement segment, brought to you by Fidelity Investments. We have stocks closing out the month of October in the red as we take a look at what has been a pretty volatile week for the markets. Today, though, Dow off just around 157 points, S&P off just over 1%, the NASDAQ closing off just around 2 and 1/2%.

So for more on all this, we want to bring in Ed Slott he's the founder of IRAhelp.com. And Ed, when you take a look at the volatility that we've seen in the market over the past couple of weeks, we're just four days out from the election at this point. When it comes to retirement planning, though, because it can be pretty stressful when you're doing that in a time like this, how should people be thinking about their retirement portfolio or planning for their retirement at a time like this?

ED SLOTT: Well, they should put most of that out of the way, because retirement is a long-term prospect. It's not today, tomorrow, or the election or next week. It could be 20 or 30 years.

What everybody should be doing at a minimum is evaluating a Roth conversion, moving your money from accounts that I like to say-- from forever tax to never tax. We have historic low tax rates. We don't know how long those rates are going to stay as low as they are now. Look at history, how high rates were when we had these problems in the past. And look at the debt and deficit numbers. At some point, the bill is going to come due.

So you want to hedge against the uncertainty of what future higher rates can do to your standard of living in retirement. By moving some money as a hedge into tax-free territory, you can lock in today's rates. It's like locking in gains. Because hopefully, if you have a tax-free account in retirement, you don't have to worry how high rates may go up. In fact, when rates go up, anything tax-free becomes immediately more valuable.

Now, I'm not saying to put everything in a Roth IRA. But probably a good plan is to do a series of smaller annual conversions over time. Yes, it means paying some taxes now, but at low rates. The foundational principle of all good tax planning sounds simple. It's always, pay taxes at the lowest rates. That's right now. And there's a silver lining for lots of people whose income may be down because of the uncertainties in what's going on this year, lots of businesses throwing off losses. They can take advantage of lower rates, moving their retirement savings into protected territory, tax-free forever.

SEANA SMITH: And I know you were saying that there's so much uncertainty right now, and you need to take advantage of the current situation. But when we look beyond that, we have to talk about the potential for a flip in the administration. If Joe Biden were to win, how do you see a Biden administration versus a Trump administration impacting retirement plans?

ED SLOTT: Well, the point is, you can take control of your tax rate. It doesn't matter what they do. Remember, if you do what I say and move it to a Roth IRA, you're locked in at a 0% rate. They can't do better than that. The rate's never going to go below zero. They're not going to pay you to move the money in. So you can take control. That's the whole point.

Don't sit and be reactive. Be proactive and have a plan to keep your retirement account protected from taxes or any future administration. You're planning not for next Tuesday or not for four years. You're planning for 20, 30 years down the road.

RICK NEWMAN: Hey, ed. Rick Newman here.

ED SLOTT: Hey, Rick.

RICK NEWMAN: Are you encountering a lot of people who are taking money out of retirement accounts just because they're running short because of this recession we're in? And what do you tell people if they have to do that?

ED SLOTT: If they have to do that, it depends what it's for. Now, some people may qualify for the coronavirus-related distributions based on loss of income or illness due to the pandemic. They will still have to pay taxes. And this is the last place you should go. Your retirement account should be a last resort. But if you have to eat and pay rent, maybe you can qualify to at least escape the 10% early distribution penalty if you're under 59 and 1/2.

So there may be some relief there. You can take that money out if you qualify under the coronavirus provisions, and you could even repay it over three years if things turn around. But it should be a last resort. Use anything else. It would even pay to sell some of the stocks, like people are doing with the sell-off, and lock in today's even low capital gain rates.

SEANA SMITH: All right. Ed Slott, always great to have you on, founder of IRAhelp.com. Have a good weekend.

ED SLOTT: You, too. Thanks.