Craig Wear, CFP®Craig Wear, CFP® | Expert in Roth Conversions & Tax-Efficient Retirement Strategies for IRA Millionaires

Lower your overall tax bill with roth conversions

3 Jan 2025 · 1 min

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YouTube video (Craig Wear, CFP®) explaining Roth conversions as a strategy to lower overall taxes by balancing lifetime vs. post-death tax burdens. Chunk covers Tip #5 of 8: converting traditional IRA assets to a Roth forces paying tax on the front end, which can reduce total taxes if the owner is in a lower tax bracket than expected heirs or than they would be in the future; aggressive conversions can push the owner into higher brackets and may not suit everyone. The advice is particularly relevant for very large estates or heirs likely to face high income when inheriting IRAs.

Chapters

Tip number five out of eight is kind of a way to balance lifetime and post death taxes. By converting to a Roth, you take on some of the tax burden yourself on the front end. I would only suggest you do this if it if doing that is better for you during your lifetime, unless it's just important to you to rescue your errors. Doing it this way can be more efficient if you're in maybe a lower tax bracket compared to what your heirs are going to face. Oftentimes when you do aggressive conversions, you force yourself to a much higher tax bracket. So this may not appeal to everybody, but it's particularly relevant if your estate is really large or if your heirs are going to be in potentially the highest earning years when they inherit that IRA from you. So the strategy here is paying the taxes during your lifetime could potentially result in in a lower overall tax bill, especially if your income and your tax rates are lower than what your beneficiaries may face when they inherit that traditional Iraq.