Case Study #1: Strategic Roth Conversions Before RMDs
📘 Case Study #1: Strategic Roth Conversions Before RMDs
Clients: John (63) and Lisa (61)
Location: Wilmington, NC
Retirement Status: Planning to retire in 2 years
🧑🤝🧑 Profile: John and Lisa are active travelers looking forward to a flexible retirement lifestyle.
💥 Before: Concerned About a Tax Explosion in Retirement
🌤️ After: A Clear, Tax-Smart Roadmap with Peace of Mind
🔍 The Problem: Tax Traps Ahead
John and Lisa had saved consistently, but nearly all their wealth sat in pre-tax retirement accounts. Without a withdrawal plan, they faced significant Required Minimum Distributions (RMDs) beginning at age 73—creating a looming spike in taxes, Medicare IRMAA penalties, and stress. They weren’t sure how to avoid these surprises.
“We thought saving was the hard part. We didn’t realize getting money out could be so costly,” said John.
💡 The Strategy: Roth Conversions in the Retirement Sweet Spot
- Withdrew from brokerage accounts early to keep taxable income low
- Executed annual Roth conversions within the 22% bracket while retired but before RMDs
- Delayed Social Security to age 70 for larger, tax-advantaged benefits
- Used tax-loss harvesting to offset taxable gains in brokerage accounts
✅ The Results: Freedom Without Penalties
- Slashed their projected lifetime tax bill by over $120,000
- Avoided all IRMAA surcharges
- Built a growing, tax-free Roth bucket for future flexibility
- Smoothed income over time to avoid costly RMD spikes
🗣️ Client Review via Wealthtender
“Brett is professional, personable and extremely knowledgeable. We now have a clear tax plan that has given us peace of mind.”
📘 Case Study #2: RMD Management & Tax-Efficient Legacy Planning
Clients: Bill (75) and Karen (72)
Location: Southport, NC
Retirement Status: Retired for 10 years
🧑🤝🧑 Profile: Bill and Karen are longtime donors to their church and active in their local community.
💥 Before: Big RMDs, Higher Premiums, and a Taxable Legacy
🌤️ After: Lower Taxes and a Smarter Estate Plan
🔍 The Problem: Tax Burdens Draining Retirement
With large IRA balances, Bill and Karen’s RMDs were forcing up to 85% of their Social Security to be taxed and increasing their Medicare premiums. They were being pushed into a higher tax bracket despite moderate spending. On top of that, they wanted to leave a legacy—without passing along a tax burden.
“It felt like we were losing control of our money, even though we were barely spending more,” Karen shared.
💡 The Strategy: Coordinated Giving and Conversion Plan
- Used Qualified Charitable Distributions (QCDs) to satisfy RMDs tax-free while supporting causes they care about
- Rebalanced income to reduce Social Security taxation
- Transitioned taxable holdings into appreciated positions for step-up-in-basis advantages
- Executed Roth conversions each year within the 24% bracket
✅ The Results: Gifting More, Taxing Less
- Cut their effective tax rate by over 7 percentage points
- Eliminated IRMAA penalties through careful income coordination
- Left a cleaner, more tax-efficient inheritance to their children
- Gave more to charity—without increasing their tax bill
🗣️ Client Review via Wealthtender
“Brett has helped us make better decisions regarding retirement withdrawals and tax planning. His insights have been incredibly valuable.”
📘 Case Study #3: Physician Nearing Retirement – Tax Rescue Before the Clock Ran Out
Client: Dr. James Carter (67)
Location: Raleigh, NC
Occupation: Physician (recently retired)
🧑⚕️ Profile: Dr. Carter recently retired from a high-income medical career and was focused on simplifying his finances and leaving a smart legacy.
💥 Before: High Income, No Roth, and RMDs Looming
🌤️ After: A Streamlined Plan with Major Tax Savings
🔍 The Problem: Big Accounts, No Exit Strategy
After years of successful practice, Dr. Carter had built over $3M in pre-tax retirement accounts—but no Roth savings. With retirement just a year away, he faced a flood of taxable RMDs and higher Medicare premiums in just a few years. He wanted to clean up his accounts and ensure his children wouldn’t face a heavy tax burden later.
“I was too busy working to think about taxes in retirement. Now it felt urgent—and overwhelming,” he admitted.
💡 The Strategy: Compress Taxes, Expand Legacy
- Consolidated 401(k) and SEP IRA balances into a single IRA for efficiency
- Began annual $150K Roth conversions, staying under the 24% bracket limit
- Delayed Social Security to age 70 to maximize future benefit and control taxable income
- Implemented trust and estate planning tools to protect and streamline the legacy
✅ The Results: Efficiency and Peace of Mind
- Reduced projected RMDs by over 40%
- Saved an estimated $220,000 in lifetime taxes
- Avoided future IRMAA surcharges
- Created a Roth-based legacy that’s simple, clean, and tax-efficient
🗣️ Client Review via Wealthtender
“Brett’s personalized attention and expertise with tax planning have given me peace of mind heading into retirement. I can’t thank him enough.”
💬 What Could a Tax-Smart Retirement Look Like for You?
You've seen how thoughtful planning helped others reduce taxes, avoid costly Medicare penalties, and leave a smarter legacy. Now it’s your turn. Let’s build a strategy that puts you in control — with more clarity, more confidence, and fewer surprises.
Brett Tushingham
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