After determining that Mr. Brown had sufficient income from the pension alone, we explored how his investments could help supplement retirement income. We recommended rolling his 401(k) plan into a Traditional IRA, giving him more flexibility regarding investments and withdrawal options, and more control over how the company stock would be handled.
Based on the findings of a tax analysis we performed, we discussed Roth conversions, which would allow us to systematically convert funds from the Traditional IRA to a Roth IRA. We explained that we would analyze the amount to convert from the Traditional IRA into the Roth IRA each year, enabling greater control over how much taxes were paid on distributions from the Traditional IRA.
We discussed his estate planning needs. While his situation is simple, we explained the importance of having appropriate beneficiaries listed on his investment accounts and an updated will.
- Over time, the Roth conversions minimized his overall tax liability by a significant amount, and the distributions from the IRA are now growing tax-free.
- His portfolio is well-diversified (while keeping a portion of company stock) designed to reduced volatility.
- His will has been updated and all assets are titled with the appropriate beneficiaries.
- We continue to meet regularly to update his financial situation as his needs and goals evolve.