Craig Wear, CFP, explains why converting only up to your tax bracket's top is a mistake. Spreading conversions over multiple years instead can lower lifetime taxes, reduce Medicare premiums, and let earnings compound longer.
Now, most people take the multi year period and they get it wrong. They just go to the top of their current tax bracket and they call it a day. And I can show you a lot of circuit situations where our clients, we prove to them if they just stayed at the top of their current tax bracket, their Medicare premiums were going to be higher over their lifetime because they're going to have more years of higher income. And their overall tax liability was going to be a lot higher over their lifetime compared to if they just left it alone and be done with it and taking care taking the hits on the rmd. So you got to get this right if you really want to save the money. But the good part about doing it over a few years, obviously, is you smooth out that tax liability and you're able to let the earnings keep up.
