Opportunities: staged Roth IRA conversions

Even if other retirement income planning strategies could be implemented to address each of the six stealth taxes that were discussed in this article, there’s one particular strategy that might reduce the income tax liability to the first five, and that’s a multi-year Roth IRA conversion plan.

The current low historic income tax rates that might expire after 2025 and even sooner could provide a great opportunity for Roth IRA conversions that plenty of us might never see again. So if you’re currently in your 50s or 60s and you already have a traditional 401(k) plan, SEP-IRA, or traditional IRA, there’s no need to wait until you reach 72 years old.

If you try a staged Roth IRA conversion plan, you could eliminate taxation on the future growth of converted assets but also reduce the required minimum distributions starting at age 72. In turn, it will allow you to reduce your exposure to the first five stealth taxes.

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