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Don't Miss this Retirement Planning Window to Save on Taxes
When is the best time to do a Roth conversion? For most people, it’s the years after they retire but before Required Minimum Distributions begin. And if you use that window well, it can be one of your best planning opportunities to manage your taxes for the rest of retirement. During that window, your taxable income may be lower than it was while you were working full time. This creates an opportunity to control your income (and taxes) by moving money from traditional IRAs or 401(k) into a Roth IRA, paying taxes today at a potentially lower rate than you might pay once RMDs kick in. How much should you consider converting? The right amount depends on your current and future tax brackets, potential impact on Medicare premiums, timing of Social Security income and taxes, capital gains, how you pay the conversion tax, and your estate plan. These calculations can get complicated, and everyone’s situation is different. And there are specific rules you’ll need to follow. So make sure you are evaluating potential conversions as part of your overall financial and tax plan with your financial advisor and tax professional. If you’re approaching retirement, have you actually mapped out your income strategy and how you’ll use the years between your last paycheck and your first RMD? Let us know if we can help model some scenarios for you.
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Securities and investment advisory services are offered through Osaic Wealth, Inc., member FINRA/SIPC and a registered investment advisor. Additional investment advisory services offered through Strategic Financial Advisors Corporation, a registered investment advisor. Strategic Financial Advisors Corporation and Strategic Financial Services Corporation are not affiliated with Osaic Wealth, Inc.
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