John Urban

Comments

• Bill, Thank you for reading, and for the generous words about the inherited IRA piece. The still-working beneficiary is the case I keep coming back to. Pairing inherited distributions against increased 401(k) deferrals turns a ten year forced drawdown into something much closer to a rollover, with cash flow and taxable income barely moving. The binding constraint is deferral capacity. Someone inheriting a large IRA can rarely absorb a tenth of it under the elective deferral limit each year, so it works best on mid-size accounts where the beneficiary has real room. Where it does fit, the ten year rule stops being a tax event and becomes a timing exercise. Your point on separate accounts deserves more attention than it gets. That deadline passes quietly and nobody sends a reminder.

  Post: Roth Conversions and Taxes

  Link to comment from August 12, 2026

• Magoo, this is the objection I hear most often, and it's the one that changed the most for me when I worked through the arithmetic. The money paid from a taxable account isn't consumed. It's relocated. Convert $200,000 at a 25% rate and pay the $50,000 from savings: before, you held a $200,000 traditional IRA carrying $50,000 of deferred tax, plus $50,000 in taxable. After, you hold $200,000 in a Roth and nothing in taxable. Your after-tax net worth is identical. What changed is that all of it now sits in a tax-free account instead of three quarters of it. So the $50,000 keeps compounding. It just compounds inside the Roth, where it's no longer paying tax on dividends and rebalancing along the way.  That drag is the actual gain from paying with outside money, and it begins immediately rather than requiring a long holding period. The real costs are elsewhere, and they're worth watching. If you raise the $50,000 by selling appreciated shares, the capital gains tax on that sale is a genuine cost, and a reason an older investor might prefer to wait for the step-up. If you pay the tax from inside the IRA instead, you really have shrunk the invested balance, which is what the article is about. And if your rate at withdrawal turns out lower than the rate you converted at, you paid too much for the shelter no matter where the money came from. William Wang, a law professor who writes on this, has a framing I've found clarifying: a traditional IRA is a joint venture in which the government owns a share equal to your tax rate, so the conversion tax isn't really a cost, it's the price of buying out that share. Once you see it that way, "the money stops compounding" becomes "the money bought something."

  Post: Roth Conversions and Taxes

  Link to comment from August 10, 2026

• Olin, that is a fair question. I have an obvious interest in the specific answer, so let me answer the general one. I would not trust any planning tool just because it produces a detailed number. The important question is whether you can see enough of the work to understand what drove that number. For me, there are a few things worth looking for:

  • Can you see the assumptions? Growth rates, spending, withdrawal order, future tax rates, and whether the results are shown in today's dollars or future dollars can change the answer dramatically.
  • Can you see what was calculated? A useful tool should let you work backward from the result to the income, deductions, taxable Social Security, Medicare premiums, withdrawals, and other pieces that produced it.
  • Does it tell you what it does not model? Every program leaves things out. I would be more wary of one that produces a confident answer for every situation without ever telling you where its limits are.
  • Does it identify the tax year and state rules it is using? Federal and state tax rules change, often in small ways that matter.
  • Can you test it against something you already know? Entering a recently filed return is a good reality check. If a tool cannot reasonably reproduce a year you understand, I would be cautious about relying on its projections 10 or 20 years out.
  I have not read the O'Shea book, so I cannot offer a comparison. But those are the standards I would use for any retirement-planning tool. And thank you for the "nebulous." I know my writing can get dense when I am deep in a topic. I will try to do better. Best regards, John

  Post: Roth Conversions and Taxes

  Link to comment from August 8, 2026

• Mark, you are right to raise both. The article prices what self-funding costs and stops there, and the two things you name sit on the other side of that ledger. On the survivor penalty I wrote a piece here in July, and the part worth knowing is that it hits middle-income couples hardest, not affluent ones. On heirs, the reason children matter is timing: under the 10-year rule an inherited traditional IRA usually comes out during their peak earning years, so the rate that applies is theirs, not yours. Thanks for your comment, John

  Post: Roth Conversions and Taxes

  Link to comment from August 8, 2026

• Rick, thank you. I ran your numbers through the same projection engine I used for the article, and they hold up. A $44,287 conversion, funded from the IRA, requires about $5,710 more from the IRA to pay the tax. Total IRA outflow is essentially $50,000, just as you calculated. The $51,200 number is worth noting. Both the conversion and the withdrawal used to pay its tax count as ordinary income. The number to watch is total IRA dollars leaving the account, not just the conversion amount. At $51,200 of IRA outflow plus $23,800 of taxable Social Security, Dianne lands at the $75,000 threshold for the full senior deduction. Past that point the $6,000 falls six cents for every dollar of income, so a dollar over the line is taxed as $1.06, which turns her 12% into roughly 12.7%. At $50,000 she stays inside the 12% bracket, and IRMAA is not in play at any of these levels. Your larger point is equally important. I gave Dianne no spending needs so the article would focus attention on the mechanics of a self-funded conversion. That makes the tax effect easier to see, but it does not tell us whether she should convert. A 66-year-old living on $28,000 of Social Security while taking roughly $50,000 from her IRA needs the broader retirement analysis you describe: spending, longevity, portfolio risk, future RMDs, and any legacy goal. The conversion might still make sense. But it is certainly not obvious from the tax calculation alone, especially when a Roth contribution during working years may have avoided the self-funding issue in the first place. John

  Post: Roth Conversions and Taxes

  Link to comment from August 8, 2026

• Dan, thank you. I think you’re right, and for one group I would put it more strongly than “suspect.” A Roth contribution while you are working pays its tax from your paycheck, which is outside money by definition. No gross-up. No additional Social Security taxation. No Medicare surcharge two years later. The mechanism in the article never starts. Whether that beats converting later still turns on the rate you paid, the years left to compound, whether a low-income window opens between retirement and required distributions, and one point that gets ignored: whether the tax savings from the traditional contribution were actually saved rather than spent. I wrote about the post-59½ case because I received emails from people who knew the pay-from-taxable-money rule but had no taxable money to follow it. They wanted to know what it costs to do it anyway. That was the gap I wanted to close. But your version of the question deserves its own piece as well. Thanks as always for adding to the conversation! John

  Post: Roth Conversions and Taxes

  Link to comment from August 8, 2026

• Thank you Gary!

  Post: Roth Conversions and Taxes

  Link to comment from August 8, 2026

• Great article Bogdan, thanks for sharing it!  The section on living off the right assets is a part that really drew my focus. Choosing which account funds retirement spending is a decision people make on autopilot, and it quietly determines how much basis their kids inherit. One companion rule that pairs with your article, and seems to catch surviving spouses: The home sale exclusion has a clock on it. A widow or widower who hasn't remarried can claim the full $500,000 exclusion instead of $250,000, but only if the home sells within two years of the spouse's death. After that it drops to $250,000 permanently. What strikes me is the contrast with the step-up you describe. The step-up arrives on its own, automatically, with nothing required of anyone. The extra $250,000 of exclusion has to be used before a deadline nobody sends a reminder about. Two years also happens to be a very short window for someone who is grieving and deciding whether to stay in the house. The step-up sets the basis. This one decides how much of what's left gets taxed. Worth knowing they run on different clocks
  

  Post: $400,000 Mistake

  Link to comment from August 1, 2026

• Lou, Thank you. The comments are always the best part. John

  Post: Widow Tax

  Link to comment from July 27, 2026

• Rick, Thanks, that means a lot given how much time you've spent in this exact material through TaxAide. Please do run with your own piece. I approached this as a snapshot comparison on purpose, so a different lens on the same problem is a good thing, not overlap to avoid. Your last point is the one I keep turning over. Everything in my article treats the year after death as the whole story, but two mechanics keep pushing the picture past that year. RMDs force larger withdrawals every year the survivor ages, since the IRS divisor keeps shrinking, so the tax bill can climb for a decade even if the portfolio never grows. And IRMAA runs on a two-year MAGI lookback, so a new widow's Medicare premium for the first year or two is still riding the couple's old joint income, before the single-filer numbers show up. Year one and year three can look nothing alike, for reasons that have nothing to do with markets or spending. I'm sure there's a lot more to think about as you develop your article. I look forward to reading it when you're done. Best, John

  Post: Widow Tax

  Link to comment from July 27, 2026