Middle-aged married mom looking ahead while enjoying today The IRS has released the income tax brackets for 2026 so I’ve begun planning our money management strategies for next year. I’m planning to aggressively execute Roth conversions in 2026 and that process will be new for me. The main learning that I took away from the recent free financial course that I attended was the risk that I’m taking by having most of my retirement savings in a tax deferred account.
Making big money moves always feels scary to me, but after rolling over my entire 401k, nothing should scare me. It’ll be tough to see the total portfolio decrease as I continue to withdraw living expenses and at the same time pay taxes on the amounts converting to the Roth but the truth is that I should see my IRA as smaller than it is since it’s untaxed.
I’ve got the plan in place and most of the conversions will be at the beginning of the year. I’m eager to get it going.
Next up: strategizing our health coverage for 2026.
October 25th, 2025 at 05:12 pm 1761408779
Roth Conversions are indeed scary, aren’t they? Especially if you got a big one. Mine is fairly small though, and assuming all looks well in 2026, I think I will start converting mine as well. Have to really sit down and look it through carefully.
October 25th, 2025 at 09:42 pm 1761424928
I built my original split by directing my contributions to a Roth account while I was working - the company matching went to the traditional 401k, plus I had money from before there were Roth options. I am split 1/3 Roth, 2/3 traditional.
When I first retired I lived off savings so I had no/little taxable income and I did some conversions to reach the limit on the tax bracket I was in.
Now with annuity, pension, social security any conversion would be taxed in at least the 22% bracket. It doesn’t seem worth it to convert at this rate. My RMD will also be in the equivalent bracket when I start to collect in a few years.
I’m interested in what ratio you are trying to achieve and how you arrived at that.
October 25th, 2025 at 11:31 pm 1761431490
Rather than a specific split target, I am targeting relative amounts. For example, I don't want an RMD that exceeds the standard deduction if possible. I'm nearly 60 now and my RMD start age appears to be 75. So, I have 14-15 years for Roth conversions before then. I plan to take SS when I'm 70 though so I need to consider that I won't want to have large Roth conversions after 9-10 years since I'll be in a situation similar to yours currently. Also, I'm married so the standard deduction is high now ($32,200 in 2026) but what if I'm widowed before 75? I know that seems morbid to think about and DH is healthy but both of us lost our mothers to cancer when they were just 61.
The standard deduction in 2026 for singles is just over $16,100. In looking at the RMD charts, it looks like a 75-year-old is expected to withdraw over 4% of the account value. Then of course, the percentage will increase every year. So doing some math: ($16,100/5%) = $322,000. So ideally, I'd have a max of $322,000 in my tax deferred account at age 75. Of course, the standard deduction should be higher then (hopefully) but also, the investments in the account should be growing between now & then too.
Good for you for getting a large chunk of your retirement in the Roth. I often felt limited because of my family situation. For example, to qualify for child tax credits, our income had to be below a threshold - something like $110k. My salary was more than that (a good problem to have, I know) so I needed to put money into the 401k to keep our taxable income low. The child tax credit was significant because we had 5 children. This year is another example: a large chunk of our income this year included long-term capital gains. I (hopefully) avoided the total income cut-off that would apply a 15% tax for those gains instead of 0%. That meant no Roth conversions this year.
In the finance class I took they made the argument that 22% isn't so high for taxes. They showed a chart of what tax rates have been in the US over time. Our tax rates today are low in comparison. They also talked of the growing debt as a looming financial crisis that will eventually necessitate higher tax rates. That's all speculation but it's interesting to consider. Having tax-free funds available is protection.
Sorry I was so long-winded!
October 26th, 2025 at 02:14 am 1761444855
I am childless so didn’t have to consider the implication of child tax credits and how contributing pre tax had a double benefit.
My mom used to say ‘life was easier when all I had to do was figure out whether to pay the electric bill or buy groceries.’ Of course she was joking, but really money is so complex. I understand how wealthy people who hire expensive but knowledgable tax advisers pay relatively little in taxes.
The average person has no chance to make consistently great decisions.
It starts with people who overwithhold and then brag about their refund - unaware that they paid interest on credit cards while giving the government an interest free loan.
And it just gets worse from there!
Some of the posters here are very sophisticated in their understanding and it’s always helpful when they share, so thank you.
October 26th, 2025 at 01:44 pm 1761486262
Contrast federal taxes with our state taxes. I live in a state with a flat tax (PA). We all pay 3.07% of our gross income. No matter the income level, the size of the family, whether contributions are made to retirement accounts - 3.07% off the top. There are a very few tax deductions available. In our 20+ years living here, we've qualified for one: contributing to a college fund. I'm not sure why that counted but not 401ks. Those were the rules. When I google state tax rates across the US, I see that ours is one of the lowest. I think it's because no one is exempt and there aren't loopholes. When I worked, my company was able to withhold exactly what I owed in state taxes from my paycheck. Easy administration & no unpleasant surprises at tax time.
I used to think the answer was financial education for young people. Then our local high school had a free financial education unit and were looking for parents to volunteer. I was elated. But when I looked through the curriculum that was required to teach: how to budget, how to build your credit score, how to get a car loan. I was disgusted. It was sponsored by one or more financial institutions. I felt like I needed to partially uneducate my boys when they came home after that.
November 6th, 2025 at 07:54 pm 1762458871