A short video by Craig Wear, CFP® offering targeted tax and retirement planning advice for individuals with large IRAs around age 65. Key recommendations: accelerate Roth conversions (even if it means paying higher taxes now) to avoid rising RMDs, and plan to avoid the “widow’s trap” where a surviving spouse faces higher tax rates on unchanged RMDs. The content focuses on conversion timing and spousal RMD risk mitigation.
If you're an IRA millionaire and you're 65ish years old, you've got some unique problems that not everybody else has. You're trying to figure out what your optimal strategy is. I got a few tips for you today. Number one, you're probably going to need to do the conversions faster than you think. You are much better off to pay today a higher tax bracket to get it converted faster than to leave it alone and to just let RMDs just gradually get higher and higher. And the other thing that not a lot of people talk about, you're going to avoid the potential of a widow's trap. It's a circumstance where one spouse dies, leaves the other spouse with all the money. The RMDs are the same as they were before, but now the remaining spouse is in a single taxpayer bracket, causing them to have the same RMDs but probably pay tax at a higher bracket.
