Retirement Accounts in Retirement

It is prudent for those entering retirement to consider a Roth Conversion. A Roth conversion is moving funds from a tax-deferred account to a Roth account, realizing the taxes, to never be taxed on the principal or gains again. Many retirees have deferred taxes on retirement savings in qualified plans, such as employer-sponsored 401(k)s, 403(b)s, and Traditional IRAs. These plans aim to defer taxes until the investor is retired and hopefully in a lower income tax bracket due to their reduced income. As pre-retirees enter retirement, it is a great opportunity to review this strategy. Roth conversions result in tax-free retirement income once the funds are later withdrawn. They even help reduce income taxes for their beneficiaries who might inherit the tax-deferred accounts.