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

Tax Free Retirement Growth with #RothConversions

18 Mar 2025 · 1 min

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1:11

Craig Wear, CFP® explains the benefits of performing Roth conversions from traditional IRAs: you pay taxes now at today’s rates, then converted funds grow tax-free with no RMDs and tax-free withdrawals. He notes secondary tax impacts of large traditional IRAs—higher taxable Social Security, increased Medicare Part B/Part D premiums via IRMAA, and larger tax burdens for heirs—and cites a client example (~$1,750,000 in an IRA leading to $2–3M in taxable RMDs). He also summarizes key mechanics/caveats: taxes paid upfront, converted amounts are available if age ≥59½, and earnings on conversions are subject to a five-year rule.

Questions this video answers

About $1,750,000.

Approximately $2–3 million in taxable RMDs over their lifetime.

59½ years old.

Medicare Part B and Part D.

Chapters

Now your Social Security becomes more taxable and your Medicare premiums through something called IRMAA also rise for Part B and Part D. And at the end of the day, then it ends up leaving your heirs with this huge tax bill as they receive their inheritance. Recent client had about a million 750,000 in an IRA and they were going to have like 2 to 3 million dollars in taxable RMDs over their lifetime. But there's a big advantage when you do these Roth conversions. A Roth conversion is you take money from the traditional IRA to a Roth ira. You pay taxes upfront, which is kind of the angst of a lot of people, and you do it at today's rates. Once those funds are converted, they're going to grow tax free, tax deferred with no required minimum distributions. And any withdrawals that you make are totally tax free. Now there are some five year rules that I'll caveat here so I don't get beat up in the, in the comments below, but as long as you're 59 and a half years old, when you do the conversions, 100% of the amount you converted is immediately available for withdrawal without any tax or penalty. The earnings on that conversion can't be withdrawn until five years later.