$5M Roth Conversion in Late 60s

Dear Anonymous –

Thanks for asking such a good question! You are asking a common question for clients I work with in my practice, specializing in High Net Worth Retirees. You sound like a lot of my clients, and want to see your net worth continuing to grow higher without giving away a lot to Income Taxes!

I hate answering your question this way, but the answer “DEPENDS” on your future goals! So I will put a little context around some common scenarios I see:

First, let’s assume you have beneficiaries, and you want to pay the taxes for them to have more to inherit, and YOU WILL NOT SPEND ALL OF YOUR PORTFOLIO. Then, yes, a ROTH Conversion would create some benefit to you, save income tax payments, and grow your wealth. I doubt I would recommend converting all $5 million, but a meaningful amount could be converted each year between now and when your RMDs begin. If you are charitably inclined, you could always start Qualified Charitable Distributions while also completing ROTH Conversions after you turn 70, to manage the tax burden.

Second, let’s assume you don’t have beneficiaries or that you don’t want to pay the taxes for your beneficiaries – then, in my experience, you won’t pursue this strategy for many reasons.

Without more quantitative and qualitative information about your personal situation, it’s challenging to provide a better answer for you.

Either way, Congratulations on saving such a large nest egg for retirement! – Chris