Designing an optimal Roth conversion strategy involves understanding five key factors to maximize tax savings and retirement benefits. Many people focus only on filling up tax brackets to save on future required minimum distributions (RMDs), but this narrow approach often leaves tens or even hundreds of thousands of dollars on the table. By considering additional factors—such as avoiding Medicare IRMA surcharges, leveraging long-term capital gains brackets, evaluating terminal tax rates for heirs, and strategically timing conversions—retirees can significantly increase their after-tax portfolio value.
Using Eric and Michelle’s case study, with $4M in assets and $6,500 monthly expenses, this approach illustrates how thoughtful planning can enhance their financial security. For instance, converting only to the 22% bracket, while avoiding IRMA surcharges and accounting for heirs’ tax brackets, added over $600,000 to their ending balance. Roth conversions require dynamic, year-to-year adjustments for optimal results, showcasing the importance of a comprehensive, flexible strategy.
=======================
🔗 Connect with us → https://learn.rootfinancialpartners.com/connect
and on Root Financial's Youtube Channel → https://www.youtube.com/channel/UCopKwWs9ea1dAOxqZOqBjpg
Get access to the retirement software I use and more → https://retirement-planning-academy.mykajabi.com/rpa
_ _
⏱Timestamps:⏱
0:00 - Meet Eric and Michelle
1:41 - Projected retirement cash flows
3:03 - Projected taxable income
5:33 - IRMA surcharges
8:13 - Long-term capital gains tax brackets
10:09 - Terminal tax rate
12:42 - Review strategy each year
14:25 - Wrap-up