Tool 06 · The pre-tax trap
The Tax Time-Bomb
The balance in a traditional IRA or 401(k) isn't all yours. The IRS owns a slice, required withdrawals force it out on its schedule, and the bill jumps the year a spouse is left filing single. Here's the bomb, and the lever that defuses it.
Social Security, pension, etc. Sets the bracket the RMDs stack on top of.
survivor files single at age
80
Same RMDs, single brackets. Watch the bomb line jump.
Pay tax now at today's rate; shrink the future bomb.
Who really owns this account, at your projected bracket
Lifetime tax · do nothing
$0
Lifetime tax · with conversions
$0
Difference
$0
Forced taxable income · do nothing
· with conversions
bracket lines
See these numbers for your actual plan
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