Retirement Tax Planning with a Flat-Fee Financial Advisor

For informational purposes only — not tax, legal, or investment advice. Your situation may differ.

If you have $1.5M in pre-tax retirement accounts at age 60, you face a straightforward arithmetic problem: those accounts will be subject to required minimum distributions starting at age 73 or 75,¹ taxed as ordinary income regardless of how you invest them. A $2M IRA at 73 generates roughly $75,000 in forced withdrawals annually in year one — enough to push a married couple into the 22% bracket, add $10,000-$20,000 in Social Security tax, and potentially trigger Medicare IRMAA surcharges on top.

The decisions you make in the 10-15 years before RMDs begin can move hundreds of thousands of dollars between your heirs and the IRS. This is financial planning work — not investment management. It's precisely the category where a flat-fee advisor who charges for advice, not asset percentage, earns their fee many times over.

The Roth Conversion Window

For most investors, the optimal window for Roth conversions runs from retirement (or the year earned income drops sharply) through age 72 — before RMDs begin and while tax brackets are predictably low. The goal is to fill the 12% or 22% bracket each year, converting just enough to avoid spilling into 24%.

In 2026, the 22% bracket for married filing jointly runs from $100,800 to $211,400 of taxable income.² After the 2026 standard deduction of $32,200 (MFJ),² a couple with $60,000 in other income has roughly $119,000 of conversion headroom before hitting 24%. Converting $100,000/year for 10 years at 22% — versus having that same $1M distributed at 32-37% during RMD years — can represent $100,000+ in lifetime tax savings.

The specifics depend on your projected RMD size, Social Security timing, other income sources, and state taxes. This is the kind of multi-variable sequencing that benefits from annual modeling, not a one-time calculation.

IRMAA: Medicare's Hidden Retirement Tax

Medicare Part B's base premium in 2026 is $202.90/month ($2,435/year per person).³ If your MAGI exceeds $218,000 (MFJ), that jumps to $284.10/month — an extra $975/year per person, or $1,950/year for a couple.³ Higher tiers reach $689.90/month per person at income above $750,000 MFJ.

The critical detail: IRMAA is based on income from two years prior. A Roth conversion in 2026 determines your 2028 Medicare premiums. Conversions that push MAGI over an IRMAA tier — even by $1 — trigger the full surcharge for the year. A well-modeled conversion strategy stays deliberately below the $218,000 MFJ threshold (or whichever tier applies) to avoid paying thousands in unnecessary Medicare surcharges.

Part D drug coverage carries its own IRMAA surcharges: $14.50 to $91.00/month depending on tier.³ These add up. For a couple 10 years from retirement, a conversion plan that stays under IRMAA tiers throughout could save $15,000-$30,000 in Medicare surcharges alone.

RMD Planning and Qualified Charitable Distributions

Under SECURE 2.0, required minimum distributions begin at age 73 for those born between 1951 and 1959, and at age 75 for those born in 1960 or later.¹ Roth 401(k) and Roth TSP accounts are no longer subject to lifetime RMDs starting in 2024,¹ which makes converting 401(k) balances to Roth IRA a cleaner long-term strategy.

For retirees who are charitably inclined, Qualified Charitable Distributions (QCDs) let you transfer up to $111,000 directly from an IRA to charity in 2026 — the amount counts toward your RMD but is excluded from taxable income.⁴ A couple donating $30,000/year through QCDs rather than cash gifts effectively shifts $30,000 from their taxable RMD, saving $6,000-$9,000 in federal tax at common retirement tax rates.

Social Security Taxation and Timing

Up to 85% of Social Security benefits become taxable income once combined income (adjusted gross income + nontaxable interest + half of SS benefits) exceeds $44,000 for married couples.⁵ These thresholds haven't been inflation-adjusted since 1983, so most retirees with savings will find most of their SS benefits taxable.

Social Security timing interacts with the conversion strategy. Delaying SS to 70 maximizes the monthly benefit but compresses the low-income conversion window — you're collecting SS income at the same time you want to be doing large conversions at low rates. An advisor models this tradeoff for your specific numbers rather than applying a generic "delay to 70" rule.

Withdrawal Sequencing

In retirement, the order in which you draw from taxable, traditional, and Roth accounts matters. A common framework:

1. Taxable accounts first — long-term capital gains rates are lower than ordinary income; taking these distributions early while tax rates are lower can be efficient.
2. Traditional IRA/401(k) via RMD — you have no choice once RMDs begin; the question is whether you've converted enough to keep the mandatory distributions manageable.
3. Roth last — grows tax-free, no RMDs (for Roth IRA), and passes to heirs with a 10-year distribution window but no income tax.

The right sequence depends on your bracket situation each year, whether you're collecting Social Security, IRMAA exposure, and state tax treatment. It's recalculated annually as circumstances change.

What a Flat-Fee Advisor Charges for This

This type of retirement tax planning engagement typically falls into one of two structures:

• Annual retainer ($5,000–$10,000/year): ongoing modeling as the situation evolves — new tax legislation, market changes, health decisions. Includes annual conversion sizing, IRMAA tracking, and RMD projections updated each year.
• One-time comprehensive plan ($3,000–$7,500): a complete retirement tax map covering conversions, RMD projections, SS timing, and withdrawal sequencing for the next 20+ years. You implement and revisit as needed.

Compare this to AUM advisory at 1% on $2.5M: $25,000/year — for a service that doesn't necessarily include proactive tax planning and may have conflicts around Roth conversions that reduce AUM. The flat-fee advisor has no financial stake in the size of your IRA balance.

If you want a one-off engagement to stress-test your current approach before RMDs begin, an hourly advisor charges $300–$500/hour. A comprehensive Roth conversion analysis with IRMAA modeling typically takes 3–6 hours of advisor time. More on hourly engagements here.

Is This the Right Use of a Flat-Fee Advisor?

Good candidates for a retirement tax planning engagement:

• $1M+ in pre-tax accounts (IRA, 401(k), 403(b), deferred comp)
• Age 55–72 — in the conversion window before RMDs begin
• Expecting taxable income to be lower now than during RMD years
• Currently paying AUM fees for portfolio management but getting minimal planning advice
• DIY investors who want a professional to model the tax math and hand it back to them

If you manage your own investments and just want the tax modeling done right, this is one of the cleaner cases for an hourly or project-based engagement. You don't need someone to manage your index funds. You need someone to run the numbers on Roth conversion sizing and IRMAA exposure for the next 12 years. That's a defined scope, not an ongoing service contract.