Nick
Simonson

Convert pre-tax assets during low-income gap years, filling the 22% bracket. Prevents future RMDs from forcing 32%+ taxation. Projected lifetime tax savings: $2.1 million. More valuable to beneficiaries under inherited Roth RMD rules vs. Traditional IRA.

Realize $120K+ in MSFT and taxable account gains at 0% capital gains tax by staying under ~$130K AGI in the transition year. Spread across two years if needed. Transition to 55ip direct indexing for ongoing tax-aware management.

Managed income below $125K to qualify for $385/month ACA premium tax credit. Recommended COBRA for 2026 (deductible already met via surgery). Bridged gap years with $50K HSA for premiums. Budgeted $25K/yr pre-Medicare, dropping to $11,280 post-Medicare.

Analyzed FRA (67) vs. early (62) claiming. FRA lifetime benefits: $1,699,920. Early: $1,426,266. Neither measurably impacts plan success rate. Decision hinges on Roth conversion year income. Breakeven at age 76 — worth revisiting at 62.

2026: Front-loaded 401k with super catch-up, contributed to Roth (IRS requires it — client qualifies at 59 because she turns 60 in the tax year). Husband received max SEP IRA contribution on 2025 self-employment income. Using outside assets to pay conversion taxes, maximizing Roth balance.

Wife claims first (62–FRA depending on income). Husband delays to 70 — boosting his FRA benefit from $3,155 to $3,910/month (+24%). Maximizes survivor benefit for wife if he predeceases her. Portfolio bridges the gap. Considered the early-claiming argument too: SS can't be passed to heirs, but portfolio assets can — early SS means more portfolio growth for their beneficiary child.

Rebalancing from 100% equities to a three-bucket system: 3–5 years of expenses in conservative to moderate holdings (cash, bonds) that can be drawn in down markets without touching growth positions. Remaining assets stay in diversified equities. Stocks solve inflation risk; cash and bonds solve timing risk. Retirement needs both.

Three-layer analysis: (1) 60% state tax exemption applies to farmland portion. (2) Sale during Medicare years increases MAGI → higher IRMAA bracket raises Part B premiums. (3) Holding the property until the first spouse's passing triggers a step-up in basis on the entire property — potentially eliminating the capital gain entirely.

Addressed the psychological challenge of moving from accumulation to decumulation. Guaranteed fixed income (SS + $25K farm rent) reduces anxiety and allows comfortable spending during the "go-go years." Spending patterns in retirement follow a predictable arc — up, then down, then up again at end-of-life — and a sound plan accounts for each phase.