Gradual Roth IRA conversions may help reduce taxes and avoid required distributions

Roth IRAs do not require minimum distributions and allow tax-free withdrawals in retirement. Converting funds from a traditional IRA to a Roth IRA can help avoid these distributions, but it requires paying taxes on the converted amount. To manage tax liability, some individuals choose to convert a portion of their IRA each year. For example, converting 10% of a $500,000 IRA annually can help maintain a lower tax bracket compared to converting the entire amount at once. This gradual conversion strategy allows funds to grow tax-free and can benefit estate planning. However, individuals should consider their overall tax situation and may want to consult a financial advisor for personalized guidance.