The years most people overlook are often the ones that matter most.
By Corey Vertich, Uhler Vertich White Advisors
A couple came to us a few years ago with $2 million dollars in retirement savings. They’d done everything right for thirty years: maxed out their 401(k)s, deferred taxes year after year, and built real wealth through discipline and patience.
But when we walked through their picture together, something shifted in the room.
That money all lived in traditional IRAs and had never been taxed.
Every dollar they’d saved so diligently would eventually show up on a tax return as ordinary income. They’d owe taxes on every distribution for the rest of their lives. And their daughter, a successful professional in her peak earning years, would inherit whatever remained with ten years to withdraw it, likely at 37%. The money they hoped to leave her one day suddenly felt much smaller.
We sat with that reality for a moment. Then we helped them create a new vision for their future.
Starting immediately, we began taking advantage of their “golden window,” strategically converting the entire IRA to Roth in those early years of their retirement (roughly $400,000 per year, over about seven years).
Some years the funds converted at 12%, some at 22%, some at 24%, depending on what else was happening in their lives. Medical expenses created deduction opportunities one year that didn’t exist the next. A property sale changed the calculus entirely in year four. Each December we recalculated, and each year the answer was slightly different.
Today, that couple pays zero income tax, and they won’t pay another penny in income tax for the rest of their lives. If they eventually pass those assets to their daughter, she’ll inherit tax-free.
That’s the future we’re continuously working towards for each of you, and it all begins in that golden window.
The Golden Window Most Advisors Miss
Between the day you retire and the day required minimum distributions begin, something unusual happens: your tax brackets empty out.
- You no longer have a salary filling up your income.
- Social Security hasn’t started yet (assuming you’re delaying, which we often recommend).
- RMDs aren’t forcing money out of your IRAs.
For the first time in decades, you have control over how much taxable income you recognize each year. I call this the “golden window.” And every year you’re in it without a deliberate plan, you lose an opportunity that doesn’t come back.
Here’s why: your lowest tax brackets (the 10% and 12% brackets) can hold a surprising amount of income. A married couple can have over $130,000 of taxable income and still be in the 12% bracket. If that space goes unused in any given year, it’s gone. You can’t bank it or carry it forward. Next year, you get a new set of brackets, and if you don’t use those either, they’re gone too.
The couple I mentioned before retired at 62. That gave us roughly 11 years before RMDs would begin—and 11 years of golden window to work with.
Related: Click here to read “Tax Season 2026: How Many of These Tax-Saving Strategies Have You Heard Of?”
Reframing Social Security
Most people think of Social Security as a stream of income: “I need money to live on, so I should start collecting as soon as I can.”
But that framing creates a trap. If you see Social Security only as income, then delaying feels very similar to simply going without.
Here’s a different way to think about it: Social Security is a piece of your portfolio. It just happens to have rules about when and how you can withdraw from it.
Once you see it that way, the planning opens up. If delaying from 62 to 70 increases your benefit significantly (and it does, roughly 8% per year), then the question becomes: can we fund your lifestyle from other parts of the portfolio while we let that asset grow?
For most of our clients, the answer is yes. We calculate what your Social Security benefit would be at 70, then draw that same amount from your investment accounts during the delay period. When Social Security starts, we turn off the portfolio withdrawals and turn on the Social Security income. Your cash flow never changes, but where it’s coming from does.
Nuances for Married Couples
The math gets more complex for married couples. Add in ex-spouse benefits (available if you were married more than 10 years and haven’t remarried before 65), and the analysis requires looking at multiple scenarios.
But the core insight stays the same: Social Security is an asset with unique characteristics, and by coordinating it with the rest of your portfolio, we can substantially increase its value for you and your loved ones.
Related: The Generational Legacy and Benefits of Financial Literacy
Four Strategies for the Golden Window
The couple with $2 million in an IRA didn’t get to tax-free status through a single maneuver. It took a combination of strategies, executed over multiple years, each one tailored to their specific situation.
These are the four approaches we use most often during the golden window. Not every client needs all four, and the sequence we employ varies depending on what someone’s starting point looks like.
1. Unwinding Deferred Annuities
If you own a tax-deferred annuity—say you put in $100,000 years ago and it’s now worth $150,000—the $50,000 gain is taxed as ordinary income whenever you withdraw it. Meanwhile, every year that money stays inside the annuity, its earnings continue to be taxed at ordinary income rates when withdrawn.
If that same $150,000 were held in a regular brokerage account, the ongoing growth would be taxed at capital gains rates. That’s typically 15%, compared to ordinary income rates that can reach 24% or higher.
The math is straightforward: leaving money in a deferred annuity costs you the difference between ordinary income and capital gains tax rates, every single year.
During the golden window, when brackets are low, we work on extracting those annuity gains. Once the taxable portion is out, the original principal can be moved to investments that generate capital gains instead of ordinary income. Over time, the tax savings compound.
2. Roth Conversions
A Roth conversion means moving money from a traditional IRA to a Roth IRA and paying tax on it now. The converted amount then grows tax-free for the rest of your life, and your heirs can inherit it tax-free as well.
The key is doing conversions when your tax rate is low. During the golden window, with brackets mostly empty, you might convert at 12%, 22%, or 24%. If you wait until RMDs push you into higher brackets (or if your heirs inherit the IRA and have to withdraw it over 10 years while they’re in their peak earning years), the effective rate could be 32% or 37%.
The couple in our example converted their entire IRA over about seven years. Some years they paid 12%, some years 22%, some years 24%. The blended average came out to roughly 18%. Their daughter, had she inherited that IRA, would have paid 37%.
That’s a 19-percentage-point difference on millions of dollars.
3. Zero Percent Capital Gains
If your ordinary income stays within the 12% bracket, any long-term capital gains that fit in that same space are taxed at 0%.
This is the same strategy we discussed in our recent tax season article, but it takes on particular importance during the golden window. With no salary and no RMDs yet, you have maximum flexibility to harvest gains at no tax cost.
The nuance is that everything affects everything else. If we convert too much IRA money to Roth, we might push ordinary income high enough that capital gains become taxable, or the additional income might make Social Security benefits taxable when they otherwise wouldn’t be.
This is why we run detailed projections each December. The goal is to use every available dollar of low-bracket space without accidentally triggering taxes we could have avoided.
4. Deduction Bunching
Even with careful income management, there may be years when itemizing deductions makes more sense than taking the standard deduction.
Deduction bunching means concentrating multiple years’ worth of deductible expenses into a single tax year. For example, you might pay two years of property taxes in one calendar year or contribute five years of charitable gifts to a donor-advised fund at once.
In a bunching year, you might have itemized deductions well above the standard deduction threshold. That creates extra room for Roth conversions or annuity withdrawals without increasing your tax bill.
We coordinate this with everything else, so you can enjoy living your life while knowing your money is working for you.
What Our Planning Actually Looks Like
Every December, we run your numbers.
- How much room is left in the 12% bracket?
- Is there an annuity with gains we should extract?
- Are there capital gains we could harvest at 0%?
- Does a larger Roth conversion make sense this year, and if so, how much?
We build out the scenarios, identify what makes sense, and coordinate with your CPA before implementing anything. We send them our analysis and recommendations so they can confirm the approach fits your overall tax picture.
The couple from our story finished their conversion last year. When they filed their taxes, their total bill for the year was right around $70,000. We had calculated their withholding so precisely that after filing, they received a refund of $74. Not $74,000, but seventy-four dollars. That’s the level of detail we hold ourselves to.
One more thing worth noting: because we also know their estate plan, we were able to help ensure they never paid taxes on the portion of their IRA earmarked for charity. There’s no reason to convert what will ultimately pass to a tax-exempt organization.
For clients whose complete financial picture is with us, this analysis happens automatically every December. It’s built into how we work.
The Window Closes Eventually
Once Social Security begins and RMDs kick in, your tax brackets start filling up whether you want them to or not. The flexibility of the golden window diminishes, and Roth conversions become less attractive because you’re already being pushed into higher brackets. The annual opportunity to capture low-bracket space shrinks.
That doesn’t mean planning stops; it just means the most significant opportunities happen earlier.
If you’re approaching retirement or recently retired, these next several years may represent your best chance to restructure your income sources in ways that reduce taxes for the rest of your life and protect your heirs from inheriting a tax burden.
We’re already doing this analysis for you, every single year. Still, if you have questions about how any of this applies to your situation, or if something has changed in your financial picture that might affect the planning, let us know. This is exactly the kind of conversation we’re here for.
Key Takeaways:
- What’s the “golden window” in retirement? The years between when you stop working and when Social Security and required minimum distributions begin (at age 73). We watch this period closely because it offers your lowest tax brackets and greatest flexibility.
- Why might you recommend delaying my Social Security? We don’t think of Social Security as just income; it’s part of your portfolio with specific rules about when you can access it. When delaying makes sense, we bridge the gap from other assets so your cash flow doesn’t change.
- How can Roth conversions help my kids? When we convert IRA money to Roth at your current (lower) tax rate, your heirs inherit tax-free assets instead of a “tax bomb” they’d have to pay out over 10 years at their (often higher) rate.
Not yet working with our team but wondering whether your retirement income strategy is capturing these opportunities? We’d welcome the chance to talk through what a coordinated, multi-year approach could look like for your family.
Let’s talk about your retirement income strategy.
The information contained in this newsletter does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of the author and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation.
Changes in tax laws or regulations may occur at any time and could substantially impact your situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors we are not qualified to render advice on tax or legal matters. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount may be subject to its own five-year holding period. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.
Investors should consult a tax advisor before deciding to do a conversion. Donors are urged to consult their attorneys, accountants or tax advisors with respect to questions relating to the deductibility of various types of contributions to a Donor-Advised Fund for federal and state tax purposes.