"The prescription from the hosts of Your Money, Your Wealth, episode 579, is direct: 'I would convert $100,000 a year or a little bit more to get them to the top of the 22%.' This strategy is essential for managing tax liabilities effectively."
"They have too much money in tax-deferred accounts and not enough years left to fix it before required minimum distributions land like a freight train. The math is sound, and the strategy works."
"The couple's balance sheet includes $2,300,000 in 401(k)s, $1,100,000 in a taxable brokerage account, and $500,000 in Roths, indicating a need for strategic tax planning."
A couple with significant pretax savings should consider converting $100,000 annually to manage their tax burden effectively. With $2.3 million in 401(k)s and limited time before Social Security, utilizing a low-income window for Roth conversions is advisable. The couple's financial situation includes a taxable brokerage account to cover conversion taxes and a defined contribution plan providing steady income. Their goal is to achieve $200,000 in pretax retirement spending while minimizing future required minimum distributions that could lead to higher taxes.
Read at 24/7 Wall St.
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