You only have a few more years to take advantage of historically low tax rates to fund your tax-free retirement. In 2026 taxes will revert back to the levels they were in 2017 before the tax cuts took place. If you’re converting your Roth IRA and trying to beat the deadline, you might actually be making a mistake in planning your retirement.
In this video, I’m going to share the Roth Conversion mistake that could sink your retirement, and share how you can avoid hitting the highest tax brackets during your conversion. Join us to learn how to plan for a tax free retirement.
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David, thank you for the reminder to pace the conversions. For older individuals like me, larger conversions than necessary could also trigger additional costs in Medicare/Social Security payments and cash flow.
Even the 24% bracket isn’t ideal.
The 12% bracket may be gone but the 15% bracket should be back and by 2026 the upper income range will probably be 100k. It’s hard to know what the standard deduction may be.
The key is to retire around 62 years old. Wait for SS until FRA of 67.
Perform Roth conversions during this time frame. If kept within 15% bracket then any ACA and eventual Medicare should be relatively low also.
If one has too much monies in tax deferred accounts then perhaps one is over saving. It’s just going to cost more anyhow via higher taxes and medical premiums.
David, thank you for always sharing this extremely valuable information. I follow and share everything that you post! I do have one question that came to mind regarding stretching these conversions, and avoiding the 32% bracket: does the fact that we should assume that the tax deferred account is continuing to grow in a “deferred” status while we’re delaying and stretching these conversions change any of the math on this? IE: Would the fact that we’re continuing to have to convert “growth/interest earned” tax deferred dollars warrant going on and stepping over the 32% threshold so we could enjoy that growth in a tax-free status vs. continuing to defer? I realize this is sort of “splitting hairs”, but I do look very forward to your response on this. Thanks again!
Brilliant. Thank you for sharing, David!
Good example of thinking outside the box!