In this conversational video, host (Speaker A) and financial planner Craig Wear, CFP® discuss the advantages and pitfalls of creating your own Roth IRA conversion plan, especially for high‑balance IRA owners. They explain that while DIY spreadsheets let you see every number and avoid professional fees, they often miss critical, interconnected factors such as future growth, required minimum distributions (RMDs), Medicare IRMAA surcharges, Social Security taxation, state taxes, and potential changes in tax brackets. A single conversion alters the IRA balance, affecting all subsequent years and the size of future RMDs, so a plan must be evaluated as a sequence, not a set of independent calculations. The dialogue covers how modest fee savings can be outweighed by larger, hidden tax liabilities, illustrated with examples of conservative versus aggressive conversion strategies. They introduce the “widow’s tax trap,” where a plan that works for a married couple may leave a surviving spouse or heirs facing higher taxes due to reduced brackets and mandatory withdrawals. The speakers stress that for modest IRA balances a simple spreadsheet may suffice, but for IRA millionaires and families the complexity warrants professional modeling and the use of their RMD calculator to benchmark potential tax savings against DIY results. The overall message is that the key question isn’t whether you can do a Roth conversion yourself, but whether your plan meaningfully changes future tax outcomes for you and your heirs.
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Hey, building your own Roth conversion plan can get a lot more complicated than it might seem. My dad has spent decades building these plans to help IRA millionaires reduce their lifetime taxes, and they almost always bring up the same questions. The first one is, why can't I just do this math myself?
Yeah, that's a fair question, but there's really no point of paying someone if they're just going to do the same math that you're already doing. Doing a conversion and building the best plan are really not the same job. Most DIY plans aren't bad. If you've saved millions of dollars, you're probably good with spreadsheets, but there are ways a spreadsheet can make you feel like you're succeeding while you're actually sabotaging the goal.
So in this video, we're going to show you the pros and cons of DIY plans and just how to avoid sabotaging yourself and where a DIY plan might fall short of the tax savings you could actually achieve. Now, the first pro is pretty clear. When you build the plan yourself, you see every number. I mean, you're living within that lifestyle, so it's easy to calculate.
Right, but the danger actually starts when every number in your calculation is correct. So let's start there.
Okay. And for the purposes of this video, I'm going to be playing the part of the person who has been DIYing their plan so far. I'll bring up the most common questions and objections I've heard from the thousands of good people we've worked with. All right. So, Dad, let's say my plan includes income estimates, my IRA balance, and planned conversions. I know that if I increase the conversion, the tax rises. If the bill gets too high, I can just lower the conversion. I'm just not trusting someone else's number. I can follow the logic there.
Yeah, I agree. And you should understand whatever plan you have. So suppose you do increase your conversion by, well, let's call it $50,000.
Okay, that means my tax goes up.
Right. And then what happens next year?
What do you mean?
Well, I mean, you just removed $50,000 from the IRA. Next year starts with a smaller balance, meaning less money remains to grow. And if less grows, the IRA at RMD age is smaller.
Right. So I'd have to run the same projection again next year. But with a different starting amount.
Exactly. So one conversion changes the conditions for every subsequent conversion. A Roth plan isn't a group of independent calculations. It's really a sequence, right? It's you change one year and you now change how much remains exposed to growth, which changes future RMDs. And you see where that's going.
Yeah. So the tax created today is just the first result.
Exactly. Yeah. And the more important the result is what the conversion prevents later. And the spreadsheet never tells you it's missing something. It just calculates. Calculates what you give it, right? Garbage in, garbage out. But if you didn't include Medicare IRMAA surcharges or how Social Security is taxed differently or your state taxes or future growth of RMDs or maybe how federal brackets might change over time, your math can be right, but still strategically incomplete at the same time. And the danger is getting the correct answer to too small of a problem.
Okay, but here's another response that we hear often from people managing their own plan. If a professional plan is only marginally better, and then I have to pay thousands in fees, isn't that DIY still better?
That's reasonable. I mean, if the results are nearly identical, keep your fee, don't pay anybody.
So then how do I know if my plan is close enough?
Oh, so how do you know it's even close at all? So you're converting before RMDs and using low-income years. That's sensible, but here's maybe what's missing. Imagine your plan converts very cautiously. And for example, you just convert up to the top of your tax bracket every year. That Bill feels conservative, it stays comfortable, and the traditional IRA comes down a little each year. But another plan converts more aggressively while the household still has room to do it. So during the first year, the main difference is obvious. The second plan pays more tax.
Which makes my plan at least look better.
Today, yes, but then the money left behind in each IRA keeps growing, right? Because you left more money exposed to growth, your account enters RMD years with a larger balance. That makes sense?
Yeah, and that leads to higher RMDs, which leads to more taxes.
Yeah, exactly. And those distributions continue generating tax long after the sting of that professional fee has faded.
So while I can know exactly how much I spend in fees, I don't necessarily know what decision is costing me elsewhere.
Right. It's kind of like an old truck driver that I used to know used to say, the scariest thing in the world is that you just don't know what you don't know. But that changes the comparison. The question is not, do I pay a fee or avoid a fee? It's, what does the DIY plan produce for me, and then what does the stronger alternative produce? And after accounting for the fee, which one reduces the tax burden the most?
So avoiding the fee is only a real advantage once I know the size of that gap.
Exactly. And that's why our RMD calculator uses the data from our client database. So you can put in your numbers, get a realistic projection based on what we've actually achieved for our clients. And if the potential tax savings there are much stronger than what your DIY plan looks to save you, well, then it might be worth paying the fee.
Speaking of tax savings, we get a lot of calls from people who love using our free RMD calculator. I mean, it's the best way to see how much tax savings you can have with a professional plan and compare apples to apples.
Yeah, that's right. And now, Mr. 65-year-old DIYer, let me ask you this next. How much did you convert last year?
An amount that seemed reasonable.
Right. And where did the IRA finish?
Uh, it went down immediately. But hey, I'd have to check the final balance. So these are the kind of answers we get on calls all the time.
Yeah, it's true, but that's okay. I mean, let's use simple numbers. Suppose the IRA grows by $140,000 and you went out and you did what was reasonable and seemed right and you convert $75,000. Did you reduce the account?
The conversion reduced it, but the account still finished $65,000 higher than where it started.
Yeah, so even though you did a conversion, it wasn't enough to stop the future problem from growing.
Yeah, and because the DIY plan conversion didn't outpace that growth, I mean, this is a trap a lot of people fall into. Doing a conversion can feel like progress. Even when the IRA is still moving in the wrong direction.
And while that happens, time is collapsing. That conversion window keeps closing. And every year before the RMDs gives you one opportunity to set yourself up for some incredible reduction in your lifetime taxes. And most people just convert to the top of their tax bracket and they move on. It feels comfortable and it feels safe. And that works for most people with less than $1 million in their IRAs, but it leads to a tax explosion for the people who worked hard to save $1 million or more, which is why most people we help avoid millions in taxes. They end up having a few strategic years where they're converting well above their current tax bracket. They avoid the situation where an unconverted IRA keeps growing and creates a tax explosion once the RMDs hit. That's why a plan has to begin with where is this account headed if I continue the current pace? Once you see the projected IRA at 73 years old, 75, and 80, you can begin to work backward to determine what the earlier conversions really need to accomplish.
So while a DIY plan, letting someone move at their own pace, feels, well, convenient, if it doesn't outpace the actual problem, people can really end up in a really tight spot.
Yeah, exactly.
So the next response we usually get is, okay, I'll just expand my plan to project the next 15 years.
Well, that sounds stronger, but it lowers your accuracy. Can you really predict the next 15 years?
No, no, not very well.
Exactly. And are you married?
Dad, you know I am.
Well, I know, but consider the tax status. Most couples plan for married filing jointly, but when one spouse dies, the survivor inherits the IRA and now files as a single person. RMDs, pensions, Social Security often stay almost as high, but the tax brackets are suddenly much smaller, which leads to potentially much higher taxes for the remaining spouse.
So even if income falls, it becomes more concentrated in higher brackets.
Yeah, that's what we call the widow's tax trap. And plan looked efficient while both were alive, but it passed an unresolved tax problem to the survivor, often when the best conversion years are now already gone. So your spreadsheet might model 15 years perfectly, but still model the wrong taxpayer for half of them. And once you recognize that the tax obligation can pass from one spouse to another, another question becomes unavoidable. What happens if the IRA outlives both of them?
Then it'll go to the children or whoever. Their other benefactors are.
Yeah, that's right. And what exactly are they inheriting then?
I mean, not just the IRA, they also inherit the entire tax obligation attached to it.
Yeah, that's exactly right. And this is why we see with a lot of clients, this is exactly what happens to it. Parents keeping the balance might feel like success, but non-spouse beneficiaries generally have 10 years to empty that account. They don't get to choose when it's convenient. They have to withdraw it. And we find, and we see that that's often during their own highest earning years as well, stacking that income on top of even higher tax brackets, or they may be just retired and they have their own retirement plan set up in place. And now all of a sudden that huge IRA that mom and dad left them just kind of blows that out of the water. And that's when a gift becomes a curse.
So keeping my retirement taxes low today could increase the taxes, I mean, my family pays later.
Well, that's right. It's probably more than could be. It probably will. The tax liability doesn't vanish. It just changed owners. Owners is all that happened.
So we're really building more of a family tax plan, not just a retirement plan.
Yeah, for a large IRA, that's often the case. Again, if you have more modest balances, these aren't as big an issue, but the conversion decision begins with one account owner, but the tax consequences continue through a surviving spouse and into the next generation.
That's a lot more overwhelming than just a neat little spreadsheet would make it seem. I'm not sure I'd ever want to DIY this.
Well, it depends on the size of the IRA, right? If the tax tax-deferred balance is modest, like I mentioned a minute ago, the RMD problem is small. Changing one conversion won't really create a massive chain reaction. But a simple problem can be handled with a simple spreadsheet. But for IRA millionaires, especially couples and that have families, a DIY spreadsheet risks ignoring the complexity of all these decisions. And with 6 or 7 figures in unnecessary taxes on the line, I just don't think it's worth the risk.
So DIY, it gives you control. I mean, you can see the math, you can avoid the fee, and move at your own pace.
Yeah, and there are some real advantages, but only if the plan is large enough to account for what happens next. So a conversion that looks right today can still leave the IRA growing too quickly, create a larger problem for a surviving spouse, or just pass the tax bill down to the kids.
So the question isn't whether you can complete a Roth conversion yourself, it's whether your plan is actually changing the future result.
Yeah, exactly. And the first step to finding out is by using the RMD calculator. Calculator that we've linked below to see where your IRA and future RMDs are headed. That will give you the first number you need in order to judge whether your current conversion pace is actually doing enough.
And once you know where that account is headed, the next question is how much you should actually be converting.
Which is exactly what we cover in this video here. So go watch that next.
