'Convert $100,000 a Year to Get Them to the Top of the 22%': The Roth Plan for a Couple With $2.3M in 401(k)s

A couple with significant pretax savings should consider converting $100,000 annually to manage their tax burden effectively. With $2.3 million in 401(k)s and limited time before Social Security, utilizing a low-income window for Roth conversions is advisable. The couple's financial situation includes a taxable brokerage account to cover conversion taxes and a defined contribution plan providing steady income. Their goal is to achieve $200,000 in pretax retirement spending while minimizing future required minimum distributions that could lead to higher taxes.

"The prescription from the hosts of Your Money, Your Wealth, episode 579, is direct: 'I would convert $100,000 a year or a little bit more to get them to the top of the 22%.' This strategy is essential for managing tax liabilities effectively."

"They have too much money in tax-deferred accounts and not enough years left to fix it before required minimum distributions land like a freight train. The math is sound, and the strategy works."

"The couple's balance sheet includes $2,300,000 in 401(k)s, $1,100,000 in a taxable brokerage account, and $500,000 in Roths, indicating a need for strategic tax planning."

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