Why Your CPA Probably Hasn’t Talked to You About Roth Conversions (And Why That Could Cost You)

Here’s a sentence I’ve said to a lot of people who walk into my office: “You’re sitting on a tax bomb, and your CPA isn’t going to defuse it for you.”

That’s not a knock on CPAs. They do incredibly important work. But most CPAs are paid to do one thing: file an accurate tax return for the year that just ended. They’re rarely paid — and rarely staffed — to design a multi-decade tax strategy.

And in retirement, multi-decade tax strategy is most of the game.

Tax Preparation vs. Tax Planning

Two very different questions. Tax preparation asks: “How do I minimize what I owe this April?” Tax planning asks: “How do I minimize the total taxes I’ll pay over the rest of my life?”

Those questions often lead to opposite answers. Sometimes the smartest tax move this year is to pay more — deliberately — because it saves you far more in the years ahead. Retirement is the one season of life where you have enough control over your income to actually execute that strategy. When you were working, your employer decided how much you earned and taxes followed automatically. In retirement, you decide when and how to create taxable income.

The core conviction: minimize lifetime taxes, not this year’s taxes.

The Tax Bomb Most Retirees Don’t See Coming

You did what you were told. You maxed your 401(k). You let your retirement accounts grow tax-deferred for thirty or forty years.

By the time you retire, you might have $1.5 million in tax-deferred accounts. Maybe more. And every dollar of it will be taxed as ordinary income when you pull it out.

Then at age 73 or 75, the IRS forces you to start pulling money out whether you need it or not. These are Required Minimum Distributions. They’re calculated by formula, and they grow every year. For someone with $2 million in IRAs at 73, the first-year RMD is around $75,000. Combined with Social Security and any pension, that can push a couple into a higher tax bracket than they were in during their working years.

Then your spouse passes. Suddenly the survivor is filing single. Same RMD income, but compressed single brackets. Your tax bill jumps — sometimes dramatically — at the worst possible time. We call that the survivor tax trap, and it’s one of the most expensive things in retirement that nobody warns you about.

This is the tax bomb. It’s predictable. It’s preventable. And most people don’t realize it’s coming.

The Roth Conversion Window

A Roth conversion is exactly what it sounds like: moving money from a traditional IRA (taxed later) to a Roth IRA (never taxed again) by paying the tax now.

You’re choosing to pay taxes voluntarily, today, on your terms — instead of being forced to pay them later, on the IRS’s terms.

The window where this works best is the gap between retirement and the year RMDs and Social Security stack on top of each other. For most people, that’s the lowest-income period of their entire adult life — the 12% or 22% bracket, instead of the 24%+ they’ll be in once everything stacks.

The Bracket Budget

The strategy is not “convert everything.” It’s “convert the right amount, every year, until the window closes.”

Each year you have what I call a bracket budget — a finite amount of taxable income you can recognize before hitting the next bracket or an IRMAA threshold. The allocation runs in priority order. First, guaranteed income (Social Security, pension, MYGA distributions) fills the bottom of the bracket. Second, whatever space remains is your conversion budget for the year. Third, if no space remains, you don’t convert that year — and that’s fine.

Spread across the window — sometimes 8 to 12 years for early retirees — these annual conversions can move $500,000 to $1,000,000 of IRA money into Roth dollars that never get taxed again.

The Trap Most Strategies Miss: IRMAA

IRMAA is the Income-Related Monthly Adjustment Amount — a Medicare surcharge that hits your Part B and Part D premiums when income exceeds certain thresholds. The reason it ambushes people is the two-year lookback: the income you create this year drives the Medicare premiums you pay two years from now. By then, the conversion feels like ancient history — but you’ll pay the surcharge for both spouses for an entire year.

A single Roth conversion that crosses an IRMAA tier can cost thousands of dollars in surcharges that nobody mentioned at the time you executed it.

The rule I use: conversions made before either spouse is on Medicare don’t trigger IRMAA. So if the income window is open before Medicare enrollment, that’s the cleanest space to convert aggressively. Once either spouse is enrolled, every conversion needs to be sized against IRMAA tiers — usually meaning smaller annual conversions that stay under each threshold.

This is one of the places where the tax strategy and the healthcare strategy genuinely talk to each other. The plan is stronger when they’re designed together, not separately.

Why Your CPA Probably Won’t Bring This Up

This isn’t a knock on CPAs. It’s how the work is structured. Most CPAs see you for an hour or two each spring. Their job is to file the return that minimizes this year’s taxes. A Roth conversion increases this year’s taxes. It only makes sense in the context of a 20-year picture — and that’s not what they’re being paid to look at.

Unless you have a CPA actively running multi-year projections, modeling your retirement income, and mapping IRMAA tiers, this conversation usually doesn’t happen. And when it does, it’s often after the optimal window has closed.

Roth Conversions Aren’t For Everyone

Honest counterweight: conversions don’t always make sense. They don’t fit if you’ll be in a much lower bracket forever (some retirees genuinely will), if you have to use IRA dollars themselves to pay the tax (this hurts the math), if most of your giving plan involves Qualified Charitable Distributions from a traditional IRA, or if you’re going to leave most of it to charity anyway.

The point isn’t “always convert.” The point is “always run the analysis.” Don’t default into the IRS’s preferred outcome without checking.

The Bottom Line

If you have significant pre-tax retirement money, you need a coordinated tax strategy that looks beyond next April’s return. Your CPA, your investment advisor, and your retirement planner need to be talking — and ideally, that’s one team or one person who actually owns the multi-decade projection.

Without that, you’re letting Uncle Sam plan your retirement for you. He’s not going to do you any favors.

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