Tax Planning for Retirement— How Aggressive Should I Be?

Written by: Anthony Striker, Senior Wealth Manager

Whether you are a client or just a reader of our blog, those who have spent time around Wheelhouse likely know that we have a strong thesis when it comes to taxes in retirement:  

1. We believe taxes could be significantly higher in the future  

2. We feel that many investors have not begun planning for that reality 

3. We educate on and utilize Roth conversions to intentionally begin paying taxes on pre-tax assets at today’s rates, allowing future growth to be completely tax-free 

As we introduce these ideas and apply them to each family’s situation, we tend to hear a lot of similar questions around the concept. Below are three of the most common, along with the answers to help explain why tax planning is never “one-size-fits-all”.  

1. Will I eventually convert 100% of my pretax assets to Roth?  

Answer-Potentially, but it may not be necessary. 

Our goal is not to eliminate pre-tax dollars completely, but to create tax diversification to the portfolio. The average pre-retiree has less than 10% of their assets in tax-free accounts, meaning future tax law will impact the majority of their savings. That lack of flexibility of where to spend from can become a problem later in retirement.  

A key driver of tax strategy is Required Minimum Distribution (RMD) age. These distributions can push families into higher brackets by forcing withdrawals and taxes on money they may not even need for day-to-day or one-off expenses. By converting (often more aggressively) in earlier years, we can reduce future RMDs to a sum that aligns with actual spending needs. Since Roth IRAs do not have RMDs, these funds create long-term flexibility and control with spending.  

2. Will a Roth conversion this year mean I pay more in Medicare?  

Answer- Potentially, but we feel it is worth it in some situations. 

Medicare premiums are based on your income two years prior, and Roth conversions will increase income. This means larger conversions can trigger higher premiums through IRMAA (Income-Related Monthly Adjustment Amount).  

This is where planning is critical. In some cases, paying a higher tier of Medicare premiums for a few years may make sense if it meaningfully reduces lifetime taxes. In other cases, a family may prefer or it may make more mathematical sense to do smaller conversions to stay below IRMAA thresholds. The right answer depends on amount of income from different sources, pre-tax asset percentage, health, and overall goals and comfortability.  

3. What if the government changes the favorable tax rules on Roth IRAs and conversions?  

We feel this is a reasonable concern, and while Congress can change tax laws at any time, altering the fundamental treatment of Roth IRAs would be a major shift and is quite unlikely in the short term.  

Today, the government views conversions as individuals pre-paying their future taxes, which increases tax revenue, which is why we joke that Congress “likes” conversions right now. Additionally, if changes were made to Roth IRAs, our belief is that assets already converted would be grandfathered under currently existing rules, as has been the case with major retirement account changes. This is also why proactive planning matters! Starting earlier, if appropriate, can increase the likelihood that converted dollars will fall under today’s tax rules instead of certain changes in the future.  

The Bigger Picture 

True tax planning depends on many moving parts: income, spending needs, Medicare, RMDs, and long-term objectives. That’s why it often takes two or three years into a Roth conversion strategy before the full picture becomes clear. With a trusted team guiding the process, tax planning becomes less about being aggressive—and more about being intentional. 

Thank you for reading. Please don’t hesitate to reach out if you have any questions.