Protect Your Loved Ones From RMDs With Roth Conversions
In this segment Craig Wear, CFP®, explains that when a married couple’s surviving spouse eventually files a single tax return, the tax brackets shrink dramatically, causing a sharp increase in tax liability on essentially the same income. This effect, combined with required minimum distributions (RMDs), Social Security benefits, and Medicare surcharges, can create a “chain reaction” that burdens the surviving spouse and family. Wear stresses that Roth conversion planning should not be based solely on the individual’s current tax bill but must account for the broader family context—including the survivor’s future filing status, the timing of RMDs, Social Security income, Medicare costs, and the needs of children. The ultimate objective is to protect the family so that RMDs never become a financial problem for anyone the client’s life touches, rather than merely trying to shrink a single RMD amount.
