The Legacy Problem

The situation

David and Susan are both 60, a year from retirement, with $2.2 million in traditional IRAs. Their children are a physician and a partner at a law firm, both comfortably in the 35% bracket.

At this balance, doing nothing is the expensive option. Left untouched at a 6% return, their IRAs grow to roughly $4.7 million by 73, generating required withdrawals that start near $177,000 a year and climb past $400,000 — income stacked on top of Social Security, taxed at high rates, and none of it needed for their own spending.

But their balance is large enough that the conventional fix backfires too. This is the case that shows exactly why the middle column exists.

Three paths, one household

What the Four-Cost approach did differently

Filling the 24% bracket on a $2.2 million balance means converting large amounts fast. At that scale, the conversions themselves push the couple over an IRMAA threshold and into the 3.8% net investment income surtax — so the tax they actually pay on the top of each conversion is well above the 24% the bracket advertises. Bracket-filling, in other words, quietly converts at a higher rate than it appears to.

The Four-Cost approach did the opposite of “convert fast.” It converted a smaller amount each year — enough to stay beneath the IRMAA and surtax thresholds so the true marginal rate stayed near 24% — and simply used more years to finish the job, starting the year they retired. The traditional balance still reaches zero before RMDs begin. But the couple never pays the hidden premium that bracket-filling walks into, and the account their high-earning children inherit passes entirely tax-free — sparing the next generation a seven-figure bill at 35%.

More conversion is not better. The right conversion is.

The takeaway

For a large balance with heirs in high brackets, the decision is rarely whether to convert — it’s how much per year, measured against the true marginal rate. Sizing each year beneath the cliffs, rather than filling the bracket, was the difference between an efficient, tax-free legacy and one that paid a premium every year and still handed the children a large tax bill.

See your own numbers

These figures are a hypothetical. Your result depends on your balances, your income timeline, your state, your IRMAA thresholds, and your heirs’ brackets.

We invite you to a complimentary, confidential Roth conversion analysis — a year-by-year look at your own true marginal rate and the path that fits your household. No cost, no obligation, nothing to purchase. And if the honest answer is that you shouldn’t convert, we’ll tell you that.

---

Disclaimer

This case study is a hypothetical illustration provided for educational purposes only. It does not represent any actual client, account, or engagement, and no portion of it should be interpreted as a testimonial or as a description of any client’s experience. The individuals described are composites. Figures are rounded estimates based on stated assumptions and are not a guarantee or prediction of any particular result; individual results will vary significantly based on income, state of residence, market returns, and tax law. All figures reflect 2026 federal parameters and are subject to change. This is not personalized tax, legal, or investment advice — consult your own CPA or tax advisor before acting.