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Roth IRAs have been around for more than 20 years, yet I regularly meet retirees and pre-retirees who haven't even considered using one as part of their financial plan.

After years of speaking with seniors and other savers at educational workshops, this seems to me a symptom of a bigger problem: A lot of people just aren't receiving proper tax planning from their financial professional. Maybe it's a lack of good training, overall apathy or, worse, negligence on the part of the person who is giving them advice, but these folks often aren't aware that without proactive planning, taxes could take a sizable chunk from their retirement funds.

For years now, people have been conditioned to invest most of their money in tax-deferred retirement accounts (IRAs, 401(k)s, 403(b)s, etc.) or, as I like to call them, tax-infested accounts. People are never pleased when they're reminded that when they retire, they'll be handing over a portion of their savings to Uncle Sam, who's been waiting eagerly to get his hands on the money they've accumulated over the years. Not only that, but if they go over a designated income threshold, determined by their filing status, it could trigger a tax on a portion of their Social Security benefits. Medicare premiums also increase for those with higher incomes.

Of course, if your income will be lower when you retire than when you were pumping money into your savings, and if tax rates are the same or lower when you retire, you might not have a problem. But that's a gamble. The national debt is more than $23 trillion, and we know the Social Security and Medicare trust funds will need more money to continue paying benefits at their current levels in the future. The money to set those things right has to come from somewhere, and most experts predict it will come from you -- through higher taxes. Meanwhile, you'll likely lose some big tax deductions as your children grow up and you pay off your mortgage.

But let's talk about now. Right now, and through 2025, tax rates have been lowered by the Tax Cuts and Jobs Act. As a result, savers who put their faith -- and their investment savings -- in a tax-deferred account have an opportunity to take back control of their retirement by moving some or all of that money to the nontaxable world.

One great way to do that is with a Roth account. Contributions to a Roth are made on an after-tax basis, so it will cost you more upfront, but your investment savings can continue to grow without the burden of taxation.

Another reason to consider converting: The new SECURE Act has eliminated the popular "stretch" IRA, and non-spousal beneficiaries now have only a decade to empty an inherited IRA. If you plan to leave all or part of your tax-deferred retirement account behind, a Roth conversion now could save a loved one from a scary tax bill later.

Each type of Roth is a little bit different, and you should take the time to find the strategy that best suits your needs. Here are a few basics:

Whether you're just starting to save for retirement or nearing the finish line, there are many advantages to including a Roth account in your overall financial plan.

For young people, it's about paying tax on the seed instead of the harvest. For older savers who've been kicking the tax can down the road, it's an opportunity to diffuse a ticking tax time bomb. Either way, a Roth account can provide added flexibility when it comes to managing your tax liability in retirement.

Kim Franke-Folstad contributed to this article.

Comments are suppressed in compliance with industry guidelines. Click here to learn more and read more articles from the author.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Cure Your IRA Tax Infestation with a Roth - Nasdaq

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Home » Exercise Programs » Cure Your IRA Tax Infestation with a Roth – Nasdaq