Roth Conversion Planning for Indiana Retirees
Not a product to sell. It's the single decision that moves the most money for the retirees we serve: how much to convert, in which years, and where to stop so you're not paying it back later in Medicare surcharges.
You don't fully own your 401(k). The IRS owns a slice.
Left alone, here's how it typically plays out. You retire, your income drops, and for a few years you're in the lowest tax bracket of your adult life. Then required minimum distributions begin, forcing taxable withdrawals whether you need the money or not. Those withdrawals can push you into higher brackets, make more of your Social Security taxable, and trigger IRMAA, the Medicare premium surcharge that catches most retirees by surprise. If one spouse passes, the survivor keeps nearly the same income but files single, often at meaningfully higher rates.
A year-by-year schedule, not a one-time event.
Convert too little and you leave the window unused. Convert too much in one year and you hand back the savings in bracket creep and surcharges. The value is in the calibration. We revisit it every year, because tax law and your life both move.
I don't prepare tax returns, and nothing here replaces the filing your accountant does each spring. Multi-year tax strategy is different work. It's deciding what your return should look like before the year ever happens. Once we set the number for a given year, your accountant just reports it.
The questions people ask first.
Yes, on purpose. The question is never whether this money gets taxed. It's when, at what rate, and on whose schedule. A conversion plan picks the cheapest years deliberately instead of letting RMDs pick expensive ones for you.
An income-based surcharge added to Medicare Part B and Part D premiums. It's calculated from your tax return two years back, which is exactly why conversion amounts have to be planned, not guessed.
Not automatically. Even after RMDs begin, conversions can still make sense for legacy planning, since heirs generally must empty inherited IRAs within ten years. It depends on the plan, which is the point.
The converted amount is taxed as income in the year of conversion, federally and by Indiana. Indiana's rate is just under three percent and falling, which is part of what makes the math attractive here. It's one piece of the broader retirement planning we build for Indianapolis families.
