Bucks Writs - Spring 2019 - 24

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source of income is $100K from a pension, this year, they
might pay a marginal tax rate of 22%.
In nine years, when the main IRA holder is now 72, the
pre-tax IRAs will have had a lot of time to potentially grow.
This household could expect to have significant required
minimum distributions (RMDs) and Social Security income
on top of the $100k pension. If the RMDs at age 72 are
about $180,000 and the household Social Security is
$60,000, then this household which only had $100,000 of
income at age 62 now has $340,000 of income. This could
increase their marginal tax rate by 10% to a total of 32%.

Conclusion
Saving for retirement has and always will be a priority for
most investors. Should you convert to a Roth IRA? If so,
how much and when? These are good questions that
require an examination of your personal situation and goals.
This is an area where a highly informed financial advisor can
help you make an educated and calculated decision. We
realize the decision to convert some or all of your retirement
account to a Roth IRA is complex. A Roth IRA can be a very
good planning tool. Among its many advantages, Roth IRAs
allow your money to grow tax free and withdrawals are
tax free as well. Please note that although Roth IRAs can
be attractive tax wise, Roth IRAs have rules and limitations.
While this article is for informational purposes only and
should not be deemed tax advice or an individualized
recommendation, we hope that some of these points are
helpful to you.

On the other hand, if this household were to employ a
partial Roth Conversion, it would allow them to pull future
income forward taking it out at a 22% rate instead of a
32% marginal rate! By taking an additional $60,000 of
income each year for the next nine years, through the
converting of $60,000 IRA money to Roth IRA money, they
will be required to pay taxes. These strategic conversions
will become Roth IRA assets and decrease the size of the
traditional IRAs. This lowers future RMDs and with all things
equal, it could decrease their total future income and shift
their future marginal tax bracket to a lower rate of 24%.

We enjoy helping clients and welcome the opportunity
to help you map out a strategy that will be best for your
situation. Saving for retirement has and always will be a
priority for most investors. To discuss your personal situation
call us and schedule an appointment. 

Michael L. Schwartz, RFC, CWS, CFS, a registered principal offering
securities and advisory services through Independent Financial Group,
LLC Member FINRA-SIPC. Schwartz Financial and Independent
Financial Group are unaffiliated entities.

This article is for informational purposes only. This information is
not intended to be a substitute for specific individualized tax, legal
or investment planning advice as individual situations will vary.
For specific advice about your situation, please consult with a tax
professional or financial professional. Source: irs.gov; forbes.com;
money.usnews.com; journalofccountancy.com.
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http://www.irs.gov http://www.forbes.com http://money.usnews.com http://www.journalofccountancy.com
Bucks Writs - Spring 2019

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