In this video, CFP® Craig Wear warns high‑net‑worth IRA owners (those with $1 million or more) that required minimum distributions (RMDs) will soon become a substantial, often unexpected tax burden. He explains that RMDs begin at age 73 for most people and shift to age 75 for those born after 1960, and that the required withdrawal percentage rises each year as the IRS life‑expectancy divisor shrinks—starting around 3.8 % at age 73 and climbing above 8 % in the late 80s. Because RMD amounts are tied to the account balance, better investment performance actually increases the annual RMD and thus the taxpayer’s lifetime tax bill, creating a paradox where market gains feel like a tax penalty. Wear then presents Roth conversions as a solution: moving pre‑tax IRA assets into a Roth IRA eliminates future RMDs and can dramatically lower lifetime taxes if executed correctly. He promotes an RMD calculator, backed by data from over 3,000 of his firm’s clients, to illustrate potential tax savings and the impact on heirs, and urges viewers to use the tool to assess their own situation.
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If you've done a great job saving and you have over $1 million in your IRA, you should feel safe and secure about your future. So why do so many people feel the opposite? Well, I think the answer is simple. The IRS is about to turn your hard-earned success into a serious tax problem. A problem that's coming whether you're prepared or not. And once it starts, you lose control over how your retirement income is taxed. So first of all, let's talk about when RMDs begin. Let me start with a simple illustration. Picture a young child playing with blocks. She carefully stacks one block on top of another, building a tower that's taller than herself. Meanwhile, her younger brother is sitting nearby, watching very closely. And of course, if you've been the brother or the sister, you know how this story ends. Just as she reaches up to place the final block, he knocks the whole thing over. In real life, let's say you're that child. You've spent decades building your retirement tower through IRAs and 401s, and we'll call the IRS your younger brother. Patient, watching, waiting for the right opportunity, and now they're coming for their share. They do it through required minimum distributions, or RMDs. Mandatory withdrawals RMDs are withdrawals you have to take once you reach a certain age, whether you need the money or not. And for most people today, RMDs began at age 73. If you were born after 1960, that age moves to 75. And every year, money is forced out of your IRA and onto your tax return. So let's talk about something that almost no one points out, at least clearly. RMDs don't stay constant or flat. They increase every single year for the rest of your life. The IRS uses a life expectancy table, and it looks complicated, but The concept is pretty simple. Each year the divisor gets smaller, which means the percentage you must draw gets larger. At age 73, it's roughly 3.8% of your balance. By your 80s, it's over 5%, and by your late 80s, it can exceed 8% of your total balance that is forced out of the account in distributions. And the longer you live, the more aggressively the IRS forces your IRA onto your tax return. Now, maybe you're thinking, of course I'll pay taxes. This money was tax-deferred. And you're right. But there's one part of this that catches people completely off guard. So let me ask you a question. Can you imagine a world where you feel a pit in your stomach every time the stock market goes up? That sounds backwards, doesn't it? But here's the truth. When your IRA grows, your RMD grows, and when your RMD grows, your taxes grow. Ironically, the better your investments perform, the larger your lifetime tax bill becomes. Now, here's the good news. There's a way to take back control. If that growth happens inside of a Roth IRA, you still get all the upside, but without RMDs and without forced tax You've probably heard of Roth conversions, and there's a lot of bad advice out there, in my opinion, but when done correctly, I've seen retirees avoid hundreds of thousands, sometimes millions in lifetime taxes.
Hey, if you've got $1 million or more in your IRAs, the IRS already has scheduled one of the biggest tax bills of your entire lifetime. It starts at 73 or 75 years old. The problem is most people just haven't seen the number yet. We have an RMD calculator that we've put together that'll give you an idea what the taxes are going to be over your lifetime, as well as Maybe what's going to be left for your heirs if you leave it all to them. We've taken it a step further and we've cross-referenced that to people just like you that have been clients of ours, of over 3,000 of our clients. And we want to be able to give you an idea what's possible for you to save if you get Roth conversions done right. So click the link below. It'll take you about 2 minutes and it'll be pretty alarming.
