As you probably know by now, Bret and I are here to help you spend more money and spend less in taxes so that you can live an even better life in retirement.

This week we’re helping you do that by sharing some lessons that we learned from our clients’ fall tax meetings. If you enjoyed our Lessons in Estate Planning episodes last spring, you’ll love hearing what we learned from our clients this fall. Press play to hear what you can learn from our experience with our clients.

Outline of This Episode

  • [1:42] Why we love Roth conversions
  • [10:40] Don’t forget to plan for taxes as a widow/er

Tax planning should be done each year with an eye toward the future

Each fall Bret and I have our annual client tax meetings. During this meeting, we help our clients plan their taxes for the year with the intention of improving their lifetime tax bill. One way to do this is by using Roth conversions as a tool to convert pretax assets into post-tax assets. This year we doubled our clients’ Roth conversions from last year.

Why we love Roth conversions

Bret and I call this time of year Roth conversion season. We love using Roth conversions as a tool to lower clients’ total tax lifetime bill because we are in a period of historically low tax rates.

It can be hard to see when you may be paying $20,000 or more in taxes. However, those who are now in a 22% or 28% marginal tax bracket would have been in tax brackets of 30-40% and even higher in the past.

We are coming to the end of the tax cuts which are set to expire in 2026. That means that 2025 may be the last year to take advantage of tax rates which we may never see again.

No matter how you slice it, Uncle Sam wants a piece of your pie. By completing Roth conversions now by filling up your tax brackets, you may be decreasing your future RMDs and taking advantage of low tax rates to decrease your lifetime tax bill.

Your tax situation may change in the future

When most people plan their taxes they only look at the year they are in. No one likes to pay a lot in taxes but sometimes by paying a bit more now, you may be saving yourself money over time.

Often people think that their tax situation may never change, but who knows where the whims of Congress will take us in the future?

People often forget to think about widowhood as well. It’s a travesty that when one’s spouse passes on the IRS adds insult to injury by bumping the new widow up in the tax brackets much quicker. Even the IRMAA surcharge rates change for widows as well. By converting your IRA dollars into a Roth as a married couple, you can fill up the tax bracket that you are already in.

As you consider your taxes this year think about taking advantage of Roth conversions to improve your lifetime tax bill.

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