What are your thoughts on Roth conversions if you are in the highest tax bracket and plan to be there moving forward? -Joel If you ask some financial professionals, the answer to this question might be a resounding no, and the discussion would be over. But there are arguments for doing Roth conversions, even if you are in the highest tax bracket. In fact, there are specific instances where converting at the highest tax rates makes sense. And they are worth considering. (If you need help managing your reti ...

The IRS released 2026 tax brackets—here’s how understanding your bracket can help you save with smart retirement and Roth conversion strategies. https://t.co/X64lbbfm0d ...

Core Insights - Transferring funds from a pre-tax retirement account to a Roth IRA can provide benefits such as avoiding required minimum distributions (RMDs) and taxes on withdrawals in retirement [1][2] - Gradual conversion of IRA funds to Roth accounts is a common strategy to save on taxes now while allowing for tax-free withdrawals later [1][4] - The decision to convert should consider the retiree's expected tax bracket post-retirement, as converting when in a higher tax bracket may not be beneficial [3] Roth Conversion Rules - Roth accounts are exempt from RMD rules, allowing retirees to avoid mandatory withdrawals that could increase tax liability [2] - Withdrawals from Roth accounts are tax-free after age 59 1/2, which does not affect Social Security benefit taxation [2] - Roth accounts facilitate tax-deferred wealth transfers to heirs, making them advantageous for estate planning [2] Conversion Techniques - Converting a large IRA all at once can lead to significant tax burdens; therefore, gradual conversion is often recommended [4] - Spreading conversions over multiple years can help avoid higher tax brackets and reduce overall tax liability [4] - The focus should be on the dollar amount converted each year rather than a fixed percentage, as this directly impacts current taxes [5]

Sit down with your CPA after October 15th when he or she's done with all the tax returns. Try to get them to do a projection for 2025 and 2026 and then see what opportunities are out there. The one big beautiful bill act has rewritten the tax landscape in ways that extend well beyond the internal revenue code.And these ripple effects are already being felt across investment decisions, retirement planning, and long-term wealth strategies. In our podcast today, my guest Bob Keebler, a partner with Keebler and ...

Group 1 - The article discusses the implications of Roth conversions for retirement funds, highlighting that while paying taxes on a conversion may not be beneficial for immediate living expenses, it can be advantageous for long-term growth and tax-free income for heirs [1][2] - Required Minimum Distributions (RMDs) are mandated by the IRS for pre-tax retirement accounts, with the starting age raised to 73 in 2023 and set to increase to 75 in 2033 under the SECURE 2.0 Act [3] - The purpose of RMDs is to ensure that taxes are eventually paid on pre-tax retirement accounts, while Roth IRAs are exempt from RMDs during the owner's lifetime, and Roth 401(k)s will also be exempt starting in 2024 [4][9] Group 2 - RMD calculations depend on age and account balance, with an example provided showing that a 75-year-old with a $1 million balance would have an RMD of $40,650 for the following year [6] - Roth conversions are considered by retirees to avoid RMDs, allowing for tax-free growth and withdrawals for beneficiaries, who must still adhere to distribution rules under the SECURE Act [9]

Core Viewpoint - The current trading of stocks at all-time highs is seen as a significant positive for working-age Americans who have consistently contributed to their 401(k) plans or similar investment vehicles [1] Summary by Relevant Categories - **Investment Sentiment** - The high stock market levels may boost confidence among investors who have been saving for retirement through 401(k) plans [1]

Core Insights - The article discusses the feasibility and implications of converting a traditional IRA into a Roth IRA for individuals aged 65 and older, emphasizing that there are no legal restrictions based on age or income [2] - It highlights the tax implications and benefits of Roth conversions, particularly the potential for tax-free withdrawals in retirement [3][4] Group 1: Roth Conversion Basics - A Roth IRA conversion involves transferring funds from a traditional IRA to a Roth IRA, requiring the payment of income tax on the converted amount now, but allowing for tax-free withdrawals in retirement [3] - Traditional IRAs are subject to required minimum distributions (RMDs) starting at age 73, which can increase tax liabilities in retirement, while Roth IRAs do not have RMDs [4] Group 2: Timing Considerations - The timing of a Roth conversion is crucial; converting sooner allows for more years of tax-free growth in the Roth account [7] - Converting a large IRA can push individuals into higher tax brackets, potentially incurring a top marginal tax rate of 37% on the conversion amount [8] - Gradual conversions can help manage tax liabilities by spreading the income increase over several years, thus avoiding the top marginal tax rate [9] Group 3: Withdrawal Rules - Funds from a Roth IRA cannot be withdrawn without penalty within five years of conversion, and each gradual conversion restarts the five-year rule for that portion [10]

Core Insights - Converting a 401(k) to a Roth IRA can provide long-term benefits but incurs immediate tax liabilities that need careful planning [2][4] - Strategies such as gradual conversions and timing adjustments can help mitigate the tax burden associated with Roth conversions [5][7] Roth Conversion Mechanics - Roth conversions require paying income tax on the converted amount, as these funds were initially contributed pre-tax [4][6] - The tax implications are treated as ordinary income, which can lead to significant tax payments in the conversion year [4] Tax Strategies for Roth Conversions - Gradual conversions over multiple years can help avoid higher marginal tax brackets, allowing for better tax management [7] - Timing conversions during years of lower income can also help keep the overall tax liability down [8] - Converting during market downturns can allow for a larger percentage of the 401(k) to be moved into a Roth IRA with a reduced tax impact [9]

Core Insights - Investors must begin taking required minimum distributions (RMDs) from tax-deferred accounts at age 73 or 75, depending on their birth year, which can result in significant cash that may not be needed for living expenses [1][2] - A Roth IRA is suggested as a suitable option for reinvesting unneeded RMD cash due to its tax-free withdrawals and exemption from RMDs during the account holder's lifetime [1] Group 1: RMDs and Roth IRA Contributions - Direct conversion of RMDs to a Roth IRA is not allowed, but individuals can contribute to a Roth IRA if they have sufficient earned income, with a contribution limit of $7,000 plus an additional $1,000 for those aged 50 and above for 2024 [2] - Earned income includes wages, commissions, bonuses, and self-employment income, while it excludes pension payments, interest, dividends, rental income, and other non-qualifying sources [3] Group 2: Income Limits and Withdrawal Rules - Roth IRA contributions are subject to income limits, with phase-out starting at a modified adjusted gross income (MAGI) of $146,000 for single filers and $230,000 for joint filers, becoming ineligible after $161,000 and $240,000 respectively [4] - A five-year waiting period is required after the first contribution to a Roth account before withdrawals can be made, and heirs must withdraw the entire balance within 10 years [5] Group 3: Alternatives to Roth Contributions - For those unable to contribute to a Roth IRA, options exist to eliminate, reduce, or delay RMDs, including converting an IRA to a Roth account after taking the RMD for the year, with taxes applicable on the converted amount [6]

Group 1 - The ability to convert to a Roth IRA is not limited by age, and there is no earned income requirement for conversion [1][2] - The primary consideration for a Roth conversion should be whether it aligns with the goals for the legacy of wealth, especially as individuals approach required minimum distributions (RMDs) [2][3] - Financial advisors can assist in managing the tax implications of a Roth conversion strategy [3] Group 2 - If the intention is to leave wealth to a charity, converting to a Roth may not be beneficial, as taxes would not be due on the IRA balance when passed to a qualified charity [5] - Conversely, if the goal is to leave wealth to family members, converting the IRA to a Roth could ensure that beneficiaries receive tax-free assets, although it may not maximize tax savings [7][8]