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

The IRA Tax Trap Costing Your Family Millions

12 Jun 2026 · 1 min

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1:04

In this video, CFP® Craig Wear explains that while compounding in traditional IRAs builds wealth over decades, the same growth also increases future ordinary‑income tax liability because every dollar in a tax‑deferred IRA will eventually be taxed. He emphasizes that the tax bill grows as the account grows, meaning a substantial portion of the balance will belong to the IRS. Wear illustrates the point with a client who managed his own investments for 30+ years, noting that the client’s impressive balance is partially “owned” by the government. The speaker warns that the window to take action—such as converting to a Roth, rebalancing, or otherwise altering the tax trajectory—is open now but will close, urging viewers to consider strategies before the tax burden becomes larger.

Chapters

Here's the part that surprises most people. You already understand compounding. You've lived it and it's how you've built what you have. Every year your IRA grew and then it grew on the growth and then it grew on that and over 30 or 40 years that turned into real wealth. That same force is now going to work against you. Every dollar sitting in that IRA is going to be taxed at ordinary income tax rates. That's not a maybe. That's the deal you made when you made the contribution. The question is only when and on what amount are you going to pay taxes? And while you're deciding, the account keeps growing. Every dollar growth is a dollar the IRS gets a larger piece of. The account that looks good on your statement, a meaningful portion of it isn't even yours. I had a client, really sharp guy, managed his own money for 30-plus years. He put it better than I ever have. He looked at his account balance and he said, well, Craig, it looks good to look at your spreadsheet and say, I got all this money. But then you have to stop and say, eh, it's not all my money. There's a big chunk of it that Uncle Sam still has rights to. And that's exactly right. The longer it sits there, the larger their share becomes. The window to change that's open right now, but it's not going to stay open forever. River.