MARCH 4-10, 2024 SPRINGFIELD BUSINESS JOURNAL · 29 If Springfield, Missouri, wasn’t on Trader Joe’s radar before, it is now. A media report mix-up on Feb. 22 had residents briefly hyped that Springfield was, at long last, getting a Trader Joe’s. Turns out it was Springfield, Virginia, not Springfield, Missouri, and a sigh of despair was felt throughout the Queen City. That snafu led to a mockumentary lamenting the situation by “The Mystery Hour” comedians and even a report in The New York Times, which cited “the geographical isolation created by the Ozark Mountains” as a reason for our city lacking some major companies, itself a funny statement. What if, in a strange turn of events, this whole situation actually helps Springfield’s case for a Trader Joe’s? A page on Trader Joe’s website, titled “Request a Trader Joe’s in My City,” calls for residents from cities like ours to simply ask the company to consider them. “There are no guarantees, but being wanted matters to us,” the website form reads. I have seen that form making its way around the online community, and beyond the attention this story has garnered in the media, I suspect that on Feb. 22, in particular, there was an uptick in requests for Springfield, Missouri. Just how many requests, I do not know because I did not receive an answer to that question from a Trader Joe’s spokesperson. Demographics and other data the company analyzes to select stores is being held close to the vest, as well. The spokesperson, Public Relations Manager Nakia Rohde, said she did not have the metrics the company uses in the store site selection process available to share. She pointed me to a couple episodes from its Inside Trader Joe’s podcast in August 2022 for additional insight. It gets us closer to understanding the site selection process for the company that has 545 stores in 42 states and Washington, D.C. – of which Springfield, Virginia, is a suburb. The podcast hosts interview Donnie Martin, vice president of real estate and construction at Trader Joe’s. Martin says the site selection team at Trader Joe’s uses a “checks and balance system internally” to help choose new store locations. “We look at accessibility ... we look at the size, we look at everything to really make sure that we belong there. It’s got to check every box,” Martin says in the podcast. “Twenty percent of the site submittals that we receive pass our tests and get to an internal review where we really dig in. That’s when we dive into everything.” Of that 20%, around half become stores, Martin says. Doing the math, that would mean about one of every 10 locations that Trader Joe’s seriously considers end up getting stores. “We could go anywhere and open a Trader Joe’s, but is it going to feel like Trader Joe’s when the customers walk in?” Martin says of the reason behind the stringent selection process. Unfortunately, specifics aren’t discussed in the podcast. So, I did a little more research. Analytics firm Numerator gives an estimate on demographics through a retailer snapshot of Trader Joe’s. According to Numerator data, middle-income shoppers, those who earn $40,000-$80,000, make up the largest chunk of Trader Joe’s shoppers, at 45%. That’s followed by high income, defined as $80,000 or more, at 39%, and low income, people who make less than $40,000, at 16%. Baby boomers account for the largest percentage of generational customers, at 32%, followed by Generation Xers, at 31%, millennials, at 29%, and Gen Zers, at 8%, according to Numerator data. How does Springfield compare? While not apples to apples with Numerator’s metrics, the most recent Census Bureau data puts the city’s median household income at $43,450. The data shows 15.9% of the population are ages 65 and over, with 17.4% under 18 years old and 5.1% under 5 years old. Taking a look at Trader Joe’s store list shows the company tends to pick areas in or near major metro areas. Going by that rubric, there could be an Ozarks regionalism play: a Trader Joe’s that would serve residents of Springfield, southwest Missouri and the tri-state area, within a reasonable driving distance. With the information that’s available, it doesn’t seem outside the realm of possibility that we could eventually get a Trader Joe’s store. Still, there’s a lot of unknown factors that go into the site selection process. For example, does the company track its competitors’ store locations in that determination process? Are crime statistics considered? There are, I’m sure, any number of metrics the Trader Joe’s team watches closely to find ideal locations. They’re unlikely to divulge that competitive information, even if we really, really want to know. Going back to that store request form, if “being wanted” is indeed one of those metrics, continued buzz and hype on our collective part in Springfield would help our cause. I’ll leave you with a social media post from the city of Springfield to Trader Joe’s: “Can’t we just talk about this a little bit?” Springfield Business Journal Digital Editor Geoff Pickle can be reached at gpickle@sbj.net. Roth conversions: A compelling strategy for retirement What would it take for Springfield to get a Trader Joe’s? Everyone wants to implement high-impact strategies to build wealth and pay less in taxes. There is one strategy folks often overlook: Roth conversions. With a Roth IRA, you benefit from both tax-free growth and withdrawals. If you follow all the rules, you never pay taxes on dollars you withdraw from a Roth IRA. Here are a few items to consider: 1. The maximum contribution in 2024 is $7,000. 2. There can be a 10% withdrawal penalty before age 59 and a half. After this, it’s all tax-free. 3. Your modified adjusted gross income must be less than $228,000 for married filing jointly. 4. As long as five years have passed since your first contribution, withdrawals of growth after age 59 and a half are not taxed or penalized. Let’s walk through an example: You contribute $7,000 to a Roth IRA in 2024. You can withdraw $7,000 without incurring penalties or paying income taxes. If you withdraw on the growth, you pay a 10% penalty. What if you and your spouse contribute $7,000 each for 25 years, and the market grows at 8% per year? You would hold approximately $640,000 in tax-free dollars. Clearly, a Roth IRA can deliver meaningful results. From a tax planning perspective, it is a great place to stash cash. That said, contributing to a Roth IRA is a basic investing strategy. Many wealthy individuals overlook Roth IRAs. Because of their high income, they assume they are no longer eligible to contribute to a Roth IRA. However, when it comes to conversions, the limits and rules change. Roth conversions allow everyone to take advantage of tax-free growth and income. How does a Roth conversion work? Traditional IRAs and 401(k)s are tax-deferred accounts. You receive a deduction today, then pay taxes when you withdraw. But you can convert dollars from these accounts into a Roth IRA, a tax-free account. Let’s say you convert $100,000 from a traditional IRA into a Roth IRA. After five years and age 59 and a half, you may withdraw funds without taxes and penalties. The $100,000 is going to be a taxable amount. You must be strategic. It is best to convert during periods when tax rates or your income are low. What would a Roth conversion look like in real life? Say from age 30 to 60, you contribute to a traditional 401(k). If your tax rate was 24%, you received a 24% tax deduction on every single dollar you contributed. For every $50,000 you contributed, you saved $12,000 in taxes. Now, you are looking to retire. You steadily saved in your 401(k) over the years. It is probably a meaningful dollar amount ready for retirement. When you retire, you roll over the 401(k) into a traditional IRA. This is a direct rollover, so there is no tax impact. You decide to convert $100,000 from a traditional IRA to a Roth IRA. You will pay taxes on this amount, but since you are no longer working full-time your tax rate is likely lower. Once converted, dollars you withdraw will not be taxed in the future. What are some of the often overlooked benefits of a Roth conversion? A traditional IRA will be subject to required minimum distributions. A Roth IRA will not. This means you have more control over your income, and in turn your taxes, during retirement. Additionally, Roth IRAs allow your heirs to avoid taxes too. Even when received as an inheritance, Roth IRAs maintain their tax-free status. So, what are the most important takeaways? 1. Roth IRAs allow tax-free withdrawals during retirement. 2. Generally, the goal is to get as much money into a Roth IRA as possible. 3. Converting from a traditional IRA to a Roth IRA is a great way to put more dollars in a tax-free account. 4. Roth conversions are most strategic and impactful during low-income years. 5. Roth IRAs can be tax and estate planning tools for retirement. Myles Jackson is a wealth management adviser at SignalPoint Asset Management LLC in Springfield. He can be reached at mjackson@signalpointinvest.com. GUEST COLUMN Myles Jackson FROM THE WEB Geoff Pickle OPINION WE WANT TO HEAR FROM YOU Springfield Business Journal welcomes responses from readers. Letters to the editor should be brief, preferably under 300 words, and may be edited for clarity, style and length. 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