Which Spouse's IRA to Convert? Roth IRA Conversion Strategies

Описание: A common question we get when creating Roth conversion plans for married clients is, “Which of our IRAs should we convert first?”

Like with any bit of tax planning, it is hard to talk in certainties because everyone’s situation can be different. But here are a few things we consider when crafting a Roth conversion plan:

First, default by converting the oldest spouse’s account first. Since the older spouse will have their RMDs kick in first, converting their account now will allow you to keep your income lower, for longer. This may give you the opportunity to avoid higher tax brackets or Medicare’s IRMAA surcharge for more years.

However there are a few reasons you may not want to convert the oldest spouse’s accounts first:

If the only one spouse is age 70.5 or older and you regularly give to charity, make sure you can continue to utilize QCDs, or qualified charitable distributions.

In this case, if the oldest spouse’s RMD will not exceed your planned giving, you should skip doing conversions on the older spouse’s account, and move to the younger spouse.

Another reason to avoid doing conversions on the older spouse’s IRA first would be if the younger spouse has a significantly higher account balance.

If the younger spouse’s future RMDs will cause significant tax problems later on, it may be worth chipping away at that spouse’s balance as early as possible.

Crafting a Roth conversion plan can have hundreds of thousands of dollars of impact on your financial plan. If you are in position of wondering how or if a Roth conversion would benefit you, please reach out. We help dozens of households like yours find ways to reduce their tax liability and create successful retirement plans.


SyncID: MB01IBH4SCVL6HY