Two Pensions AND Social Security…Do I still Need To Do a Roth Conversion?

I wanted to share this article with you because it addresses a crucial question everyone should consider: “Should I do a Roth conversion on my IRA?” In San Antonio, known as Military City, USA, many people have a couple of pensions along with Social Security. For those of you who have served this wonderful country, thank you for your service. We greatly appreciate you.

Now, back to the question at hand. Should we convert to a Roth IRA? In my opinion, every single one of you should discuss this annually during your office visits. It’s essential to ask your CPAs if it makes sense to do a Roth conversion each year, considering it must be completed by December 31st. Planning now is crucial as waiting until tax season in February, March, or April will be too late. Key factors include your current tax bracket, future tax rate expectations, and the annual conversion amount.

Taxes are set to rise, with 2026 bringing higher rates and a reversion to the previous tax code, which slightly increases taxes for retirees. Notably, you’ll lose half of your standard deduction. For instance, the gentleman in the article will begin required minimum distributions (RMDs) from his IRA in 2028, impacting his tax returns. Hence, it might be wise for him to start conversions now to mitigate future tax burdens. Each person’s situation is unique, so it’s vital to review your portfolio and tax return to determine if a conversion makes sense for you.

Contact us to start planning how to reduce your taxes and those of your beneficiaries. Have a wonderful day, and feel free to share any articles you’d like us to review. Take care!

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