How a Smart Tax Move Helped One Couple Retire Earlier — and Wealthier

What if you could add $4 million to your after-tax retirement wealth — without taking on more investment risk?

For one high-income couple in their 30s, a well-timed Roth conversion strategy made exactly that difference.

In this post, we’ll walk through the numbers, the strategies compared, and the tax insights that helped unlock a major advantage.

The Couple’s Starting Point

• Age: 39 (married couple)
• Assets:
  • $1,000,000 in Traditional IRAs
  • $3,000,000 in taxable brokerage accounts
• Tax Bracket: 37% (while working)
• Retirement Plan: Retire early at 45 and start withdrawals immediately
• Goal: Maximize after-tax wealth through life expectancy (age 85)

The Three Strategies Compared

1. Do Nothing – Keep the Traditional IRA

• No Roth conversions
• Withdraw in retirement and pay income tax later
• Subject to Required Minimum Distributions (RMDs) starting at age 75

2. Convert Everything Now – All at 37%

• Convert the entire $1M IRA now
• Pay ~$370,000 in taxes from the taxable account
• All future growth becomes tax-free inside a Roth IRA

3. Blended Approach – Some Now, Most Later

• Convert 10% now at 37% while working (Done strategically, when market dips)
• Convert 90% later at 24% during the first 5 years of early retirement
• Taxes paid from taxable assets

The Results at Age 85 (After-Tax Net Worth)

💡 The Roth strategy created a $4.4 million boost in after-tax wealth compared to doing nothing.

Why This Strategy Works

• Bracket Arbitrage: Convert more in low-income years to reduce the average tax rate on IRA assets
• Tax-Free Growth: Once converted, Roth IRAs grow tax-free and can be withdrawn tax-free in retirement
• No RMDs: Roth IRAs aren’t subject to required distributions during your lifetime
• Estate Planning Friendly: Roth IRAs pass to heirs income-tax-free, and taxable assets receive a step-up in basis

What It Means for You

If you're a high-income professional or business owner planning to retire early — or expecting lower-income years ahead — this kind of Roth planning could make a meaningful difference.

But the right approach depends on:

• Your income trajectory
• Your spending needs
• Your portfolio mix
• And your long-term goals

Want to See What This Could Look Like for You?

We run custom Roth conversion analyses for clients to compare scenarios like these side-by-side — factoring in your tax bracket, timeline, and goals.

Scedule a free strategy call

Smart tax moves today can create millions in value tomorrow.