Craig Wear, CFP® advises that IRA millionaires should consider paying taxes now (e.g., via Roth conversions or current taxable events) to avoid larger tax consequences later—higher required minimum distributions, increased taxation of Social Security, and higher Medicare Part B/D premiums. The segment warns these effects can accumulate and ‘sneak up’ on retirees.
I will promise you that if you are, especially if you're an IRA millionaire, if you pay the tax now, you're going to save yourself a lot of money, because the option is pay tax later. But you're going to end up paying a lot more tax later. You're going to pay higher required minimum distributions. Your Social Security, Medicare premiums, Part B and D are likely going to go up, and you may end up having to pay tax on your Social Security. Some people are going to pay tax on their Social Security anyway, but what happens is these things just sneak up on you.
