Her Inherited IRA Became a Roth Opportunity

Every year, Diane was writing a tax check she didn't want to write. Some of it came from her paycheck. Some of it came from money she was forced to pull out of an inherited IRA she didn't even need. And the Roth conversions she actually wanted to do? They felt completely out of reach.

Meet Diane

Diane is 63, single, and retiring this year. She has a strong 401(k), a comfortable salary, and lives in a state that takes a generous slice of every dollar she earns. She also has an inherited IRA from her dad that has to be fully emptied by 2035. She didn't want more income. She wanted less tax. And she wanted real Roth dollars she could spend tax-free later in life.

The Trap of Just Doing the Minimum

Most people in Diane's spot do the bare minimum. They take the required distribution from the inherited IRA each year, pay the tax, and tell themselves they'll figure out the rest later. Then 2035 arrives, and the account has to be emptied in one painful tax year. It's like ignoring a slow leak in the roof. The water keeps coming. By the time the ceiling sags, the repair bill is enormous.

Balancing the Puzzle Pieces

Here's the shift we made. While Diane is in her lower-income early retirement years, we take only the minimum from the inherited IRA, and use the rest of her favorable tax bracket for Roth conversions. The principle is simple: pay tax on your terms, in the bracket you choose, on the dollars you control. After a few years of conversions, we'll start pulling more from the inherited IRA voluntarily, well before the 2035 deadline, so the final year never becomes a tax spike.

What It Feels Like Now

Diane is walking into retirement with a real plan. She knows what's coming out of which account, and roughly what her tax bill will look like each year. The 2035 deadline doesn't loom anymore. It's just a date on the calendar. And every year, more of her wealth quietly moves to the Roth side of the ledger, where it grows tax-free for the rest of her life. She finally feels in control of her money instead of reacting to it.

The Bigger Idea

When two tax problems collide, like an inherited IRA and a desire to do Roth conversions, the answer usually isn't picking one over the other. It's balancing both, on purpose, over time. The best retirement plans aren't about doing one thing perfectly. They're about fitting the pieces together so nothing breaks at once.

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Happy retiring,

Josh Rendler, CFP® Founder, Motion Retirement Partner, Award-Winning Retirement Firm