In this video Craig Wear, CFP®, addresses IRA owners with $1 million+ balances who are planning Roth conversions for the 2026 tax year. He argues that waiting until December to act limits the ability to execute a comprehensive, tax‑efficient strategy. Wear presents a five‑item checklist that should be completed now: (1) decide the total amount to convert by working backwards from the desired end‑state, using a "tax‑adjusted net worth" framework and a concrete example couple (Walt and Evelyn) to show how a forward‑looking plan can add up to $750 k of net worth versus a year‑by‑year bracket‑filling approach; (2) determine which "pocket" will pay the conversion tax—outside savings, withholding, or the IRA itself—highlighting the impact of penalties, state tax, and the importance of preserving the full conversion amount in the Roth; (3) verify the custodian’s real processing deadline and required paperwork, noting that internal cut‑offs often precede the December 31 legal deadline; (4) understand how conversions affect Medicare premiums via the two‑year income look‑back, treating the Medicare surcharge as a temporary speed‑bump rather than a hard wall; and (5) count the remaining "prime conversion years" before required minimum distributions (RMDs) begin, because each unused year reduces the opportunity to convert at favorable married tax brackets. Throughout, Wear uses numeric scenarios, emphasizes early planning, and invites viewers to a free live class on paying conversion taxes. The overarching claim is that following this checklist can preserve or add hundreds of thousands of dollars to a family’s wealth and dramatically reduce heirs’ tax burdens.
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Hey there. So if you've got $1 million or more in an IRA, you've likely been told to wait until December to start your Roth conversion for the year. And that sounds like smart advice, but what if I told you there are 5 things you need to check right now before you move a single dollar? People who wait until December usually only have time to check off 1 or 2 items on this list, but IRA millionaires who start now have time to check off all 5 and can end up keeping $500,000 or more by doing so. So if you don't know me, I'm Craig, and Roth Conversions for IRA Millionaires is Really all we do. So far, we've helped more than 3,000 families, and our strategic plans project over $10 billion in lifetime savings for those families. So let's get to the checklist, starting with making sure you decide how much you're converting before you decide when. This sounds simple enough, but it's actually where a lot of IRA millionaires go wrong. The typical advice usually goes something like this. Wait until you know your total income for the year so you can see how much room is left in your current tax bracket. Then you convert just enough to fill in that gap. And if you do your own conversions, You probably have a spreadsheet that does exactly this for you. And look, I get it. That feels pretty safe. But the problem is that it's only measuring this year's tax bill. And in the long run, that can cost you and your loved ones big time. Let me show you what I mean with a couple we'll call Walt and Evelyn. So let's assume about a 7% average rate of return on their portfolios, and both of them live to age 90. Walt and Evelyn are in their early 60s with about $1.5 million in their IRAs and, oh, a little over $200,000 in savings. The way we keep score is something we call tax-adjusted net worth. And figuring that out is really simple. Every dollar in an IRA has a tax bill attached to it. You just haven't paid it yet. So we take that tax bill out, and what's left is what you keep. That's what we call your tax-adjusted net worth. So if Walt and Evelyn never convert, we'll call that zero. And if they fill the 22% tax bracket every year, by 2055, they end up close to $400,000 ahead. And that's real money. But look what happens when they plan using their lifetime numbers instead of doing the same thing every year. By 2055, they're more than $1,000,000 ahead. That's nearly $750,000 more than filling the 22% bracket and stopping. And that's what Evelyn has to lean on if Walt passes, and what's left for the kids after that. So how did they get their number for this year? Well, they didn't start with how much room was left in their bracket. They started at the finish line, how much of that IRA they should move to the Roth and how many years they have to do it before required distributions take over. From there, we just work backwards. So for Walt and Evelyn, that's about $725,000, roughly half of their IRA over 5 years. $350,000 this year, a few more strategic years, and they're done by 2030. That first number is way past the top of their 22% tax bracket, but it's the number that gets Evelyn and the kids that extra 3 quarters of a million dollars. And because they know it before the year starts, it's a real plan, not just kind of what's left over in December. The second item on your list to check off before December is to know where you're paying the tax from. So here's something we hear often from people who are looking to do strategic Roth conversions. It sounds great until you try to figure out how to pay the taxes. We hear that all the time. And I get it, but nobody wants to think about paying taxes of any kind. But if you wait until December to figure this out, you might end up pulling money from the wrong place or at the wrong time. The key is that you want to have enough time to figure out which pocket cost your family the least. And there are 3 pockets you can choose from. Pocket number 1 is usually the best option. It's your savings outside the IRA, like cash or even a taxable investment account. In my book, I call that stashing the cash. By paying your conversion tax from this pocket, you ensure every dollar you convert lands in the Roth and keeps growing income tax-free. Pocket 2 is withholding from your other income, like pensions or Social Security. The nice thing about withholding is the IRS treats it as if you paid it evenly throughout year, so it can help you avoid an underpayment penalty if you do a big conversion late in the year. Pocket 3 is kind of the last resort, is paying the conversion tax from the IRA itself. If you have to pull money from this pocket, here's how I'd do it. Let's say you plan to convert $100,000 this year, withhold an additional $23,000 for taxes. That way, the full $100,000 still lands in the Roth. That $23,000 doesn't though, and if you're under 59 and a half, the IRS can add a 10% penalty onto it. Whichever pocket you pick, don't forget to add your state sales tax to the math because a lot of people seem to leave that out. Now, look, there are actually 5 different ways to pay your conversion taxes, and I walk through all of them in a free live class called How to Pay Taxes on Roth Conversions. You can watch that at the link in the description below. The 3rd item on your list to check off before December is knowing your real deadline. One thing we see so many people get wrong about Roth conversions is their personal deadline to convert. So it's important to know when that actually is. Because while December 31st is the legal deadline, your real deadline is probably a couple weeks earlier than that. Why? Well, your custodian usually has an internal cutoff. So you may use a Schwab or Fidelity or Morgan or one of those. December is their busiest month and they work conversion requests in order that they come in. So if you get your conversion request in too late and it doesn't post until January 2nd, all of a sudden it's a conversion that counts next year, not this year. And this isn't like an IRA contribution where you get until mid-April to get it done. If you wait until mid or late December, you're basically standing in line. But if you check this item off your list now, that's a lot like having a FastPass at Disneyland. So what Whatever month you're watching this in, I want you to call your custodian right after the video and ask them 4 simple questions. What's your cutoff date? What paperwork do you need? How long does processing take? And how will you confirm the conversion went through? Get those answers early because once the conversion goes through, there's no undo button. You're stuck with whatever you did. So the 4th item to check off your list now is knowing which years your income gets counted. A conversion gets taxed the year you do it, but Medicare looks back 2 years to set your premiums from about Age 63 and on, this year's conversion can raise your Medicare bill. For a married couple, Medicare adds an extra charge to your premiums once your income goes over about $218,000. So a conversion of a couple hundred thousand dollars probably puts you over that first threshold. What you're really deciding is how far over you should go and for how many years. So for a couple, that extra Medicare charge runs anywhere from about $2,000 to more than $11,000 a year. So plenty of people treat that $218,000 cutoff like a wall. They keep every conversion small just to stay behind it. But really, the plan that is going to protect you the most is treats that wall like a speed bump. You pay higher Medicare premiums for a few years while you're converting, and then 2 years after the last conversion, they're gone. You go right back down to the minimums. That's a lot better than letting big RMDs push you over that cutoff anyway, as your RMDs grow over the years, because that surcharge can follow you and your spouse for the rest of your lives. Remember Walt and Evelyn from earlier in the video? If they pay that surcharge for a few years on their plan, their lifetime Medicare bill still comes out about $70,000 lower than if they did nothing. So figure this out now while you still have plenty of time to make a plan, because a rushed decision in December could affect your plan in the years to come. The last item to check off your list is probably the most important one because it actually tells you how long to convert. Item number 5 is counting your conversion years. How do you do that? This is really simplistic, but we'll start this way. Start by finding the year your RMDs kick in. That's going to be age 70. 73 or 75, depending on when you were born. Count the years from today to that age. Those are your prime conversion years, and every one you don't use is gone for good. If you turn 66 this year, you've got about 9 of them. If you turn 70, it's about 3. That doesn't mean that you only convert those years, but those are the prime years. Those are the ones you want to get as much as you can. Those years are worth even more while you and your spouse are both alive. Married tax brackets are the widest they are during that period of your life, but single brackets are roughly half as wide. So you want to use those wider brackets if you can. So these years don't just protect you, they're also great for making a plan to protect your spouse and for what gets passed on to your heirs. Now look, if your count is zero because RMDs have already started, you're not too late. At this point, the plan is really about protecting the people you leave behind more than it is about protecting you. Going back to our example couple from earlier, you can see that most of Walt and Evelyn's protection lands there also. If they do nothing, their kids inherit a tax bill of $1.2 million. Plan cuts that to a little over $100,000. And the first year Evelyn files on her own, her tax bill drops from about $136,000 on the do-nothing plan to about $16,000, just because they took action ahead of time. And look, these are life-changing moves. So before this year's Roth conversion, run your plan against the checklist. Most people who wait until December are lucky to get through one or two of these. But if you start now, you got time to check off all 5. The best time to start was January. The second best time is today. And if you want to find out the 5 Roth conversion myths that cost IRA millionaires a fortune, check out this video and I'll see you there soon.
