Should Married Couples Do Roth IRA Conversions? A $2.75 Million Dollar Retirement Case Study.

By David Lundberg, MBA, MSCJ, Marine Veteran, Flat-Fee Fiduciary Financial Planner. Ashley Lundberg, MSBL, Financial Educator and Wellness Guide. Founders of Awaken Financial Designs. Yoga Teacher Certified for Wellness. Headquartered in North Carolina, Arizona, and virtually nationwide where appropriately licensed.

One of the most common questions we hear from married couples approaching or already in retirement is some version of this: Should we do a Roth IRA conversion? The surprising reality is that two couples with the exact same assets can experience dramatically different retirement outcomes depending on how and when those assets are used.

It often arrives wrapped inside deeper questions. How much can we actually spend each month after taxes? What happens if one of us passes away earlier than expected? What do our children or grandchildren actually receive after taxes? And underneath all of that, the quietest question of all: are we actually okay?

For many couples who have spent decades saving carefully, building careers, raising children, and trying to do the right things financially, that question rarely gets answered with confidence. Not because the answer is unknowable, but because no one has shown them their own numbers in a coordinated visual plan.

Today we want to walk through an example retirement case study (similar to the people we help) for a married couple with approximately $2.75 million in total assets. We modeled four different retirement plans for them, each with very different outcomes for monthly spending, lifetime taxes, surviving spouse impact, and legacy.

Our hope is that by the end of this article, you may begin to see how different the answer to "should we do a Roth IRA conversion" can be once it is viewed inside a complete coordinated plan rather than in isolation.

A Note About This Case Study:We recently filmed a comprehensive YouTube video walking through this entire four-plan retirement case study with all the visuals, charts, and decision frameworks discussed below. If you prefer to watch instead of read (or both), you can see the full video here: Should Retired Couples Do Roth IRA Conversions? 4 Plans Modeled (YouTube). This article adapts that video into written form for couples who prefer to read and reference the planning concepts at their own pace.

A Brief Wellness Note Before We Begin

Before walking into financial decisions of this size, we often encourage a moment of pause.

As certified yoga and breathwork instructors with a focus on pranayama, we have seen how much the nervous system influences clear thinking. Decisions about money, retirement, and family legacy carry weight, and even one minute of intentional breathing can help create more presence before reading on.

If you would like to try a simple version of Bee Breath, often called Brahmari Pranayama, sit upright with your spine relaxed. Breathe in slowly through your nose, then exhale gently through your mouth twice. On the third breath, inhale deeply, hold briefly, and then exhale with a soft humming sound until the breath naturally completes with vibration. Even one round can shift how the body and mind feel before walking into important conversations.

Now let us walk into the case study itself.

Meet Mark and Carol: A $2.75 Million Retirement Snapshot

For the purposes of this example, we will call this couple Mark and Carol. All names and identifying information have been altered for privacy.  Mark is 66. Carol is 63. They retired at age 62 and currently live in Arizona, which carries a flat state income tax rate of approximately 2.5 percent. Their two adult children are independent, and they have several grandchildren they care deeply about.

Their starting financial picture looks like this. Combined IRA balances of approximately $2,200,000. Combined Roth IRA balances of approximately $300,000. A taxable brokerage account of approximately $250,000. A bank account holding approximately $150,000. Total investable assets of approximately $2.75 million.

Both are already receiving Social Security Benefits. Mark receives approximately $3,100 per month. Carol receives approximately $1,700 per month. This becomes important later when we discuss what may happen to a surviving spouse.

This is the starting point for every plan we modeled. Identical inputs. Identical couple. Identical assets. Identical Social Security. What changes between the four plans is strategy.

What makes this case study valuable is not the numbers themselves. It is the fact that every plan begins with the exact same couple, the exact same assets, and the exact same starting point. Only the strategy changes.

Plan 1: No Roth IRA Conversion

The first plan we modeled assumes Mark and Carol do not perform any Roth IRA conversions at all. They continue along their current path, taking distributions from their traditional IRA as needed and allowing Required Minimum Distributions to occur naturally over time. Under this scenario, their projected monthly net after-tax spending is approximately $13,495. Their estimated lifetime effective tax rate is approximately 24 percent.

The more revealing number, however, is what we call the legacy composition. This describes what their heirs may potentially receive, broken down by account type, under straight-line illustrative projection assumptions with no withdrawals.

In Plan 1, approximately 59 percent of the legacy arrives as an Inherited IRA. Approximately 23 percent arrives as a Taxable Step-Up in Basis. And approximately 18 percent arrives as an Inherited Roth IRA.

This matters because under current law, each of these account types is taxed very differently when inherited. An Inherited IRA generally requires the beneficiary to pay ordinary income taxes on distributions, and under the SECURE 2.0 Act ten-year rule, most non-spouse beneficiaries must fully distribute the account within ten years of the original owner's death (either qualified withdrawals are taxable).

A Taxable Step-Up in Basis is generally far more favorable. Under current law, the cost basis of appreciated investments in a taxable brokerage account may step up to fair market value at death, often eliminating capital gains taxes for the heirs. There is also no ten-year forced distribution requirement.

An Inherited Roth IRA may potentially pass tax-free when distributions are qualified, though most non-spouse beneficiaries still face the ten-year distribution rule.

In Plan 1, most of the legacy arrives taxable to heirs. The monthly spending is strong while alive, but the after-tax inheritance may be smaller than many couples realize.

Plan 2: Roth Conversion to the 22 Percent Bracket

The second plan we modeled introduces a Roth IRA conversion strategy. We modeled gradual conversions filling the 22 percent federal tax bracket during lower-income years.

Under this approach, projected monthly net after-tax spending decreases to approximately $10,121. That is approximately $3,374 less per month compared to Plan 1.

However, several things change favorably over time. Their estimated lifetime effective tax rate moves toward approximately 0 percent over the long term. The legacy composition shifts dramatically. Under our straight-line illustrative projection, approximately 100 percent of the legacy may arrive as an Inherited Roth IRA, which under current law may potentially pass tax-free to qualified beneficiaries.

This is where the tradeoff becomes very visible. They give up real spending during the conversion years. They receive a different long-term outcome in exchange.

We also examined the Roth IRA Conversion break-even analysis carefully. Under current tax law and the assumptions we used, the break-even point on the conversion was not reached within the plan period. The crossover lines were approaching by Carol reaching age 88 in approximately 2051. In other words, the conversion benefit accrues primarily to heirs rather than to Mark and Carol themselves during their lifetimes. This is one reason we encourage couples to clarify whether their primary objective is maximizing lifetime spending, maximizing legacy, or creating flexibility for a surviving spouse. 

That is a meaningful insight. It does not make the conversion wrong. It changes who the conversion is truly designed for.

This is where many couples discover that Roth conversions are often less about reducing taxes today and more about deciding whether they want to transfer wealth to themselves or to future generations.

Plan 3: Aggressive Roth Conversion to the 32 Percent Bracket

The third plan tests a much more aggressive strategy. We modeled Roth IRA conversions filling all the way up to the 32 percent federal tax bracket. Under this scenario, projected monthly net after-tax spending drops to approximately $2,432. That is the most dramatic spending tradeoff in any of the four plans.

Their estimated lifetime effective tax rate moves toward approximately 0 percent over the long term. The legacy composition reaches approximately 100 percent Inherited Roth IRA under our illustrative projection. The Roth IRA break-even analysis showed the closest approach to break-even of all conversion scenarios, but break-even was still not achieved within the plan period.

When couples see Plan 3, they often pause. The legacy outcome looks appealing on paper, but the monthly spending sacrifice during the conversion years is significant.

We do not recommend this plan for most couples we work with. We present it because the comparison matters. Seeing all four plans side by side often clarifies what a couple actually values when the tradeoffs become visible. Many retirees simply do not have the cash flow flexibility required to support aggressive conversion strategies without materially impacting their lifestyle.

This is part of why we built our planning process the way we did. Numbers without options can feel like pressure. Numbers with options often create clarity.

Plan 4: No Conversion and a Spouse Passes at Age 77

The fourth plan is the one we ask couples to read most carefully. Plan 4 assumes no Roth IRA conversion strategy and models what may happen if one spouse passes away at age 77, well before normal life expectancy. In our model, Mark passes at age 77.

Under this scenario, projected monthly net after-tax spending remains at approximately $13,273 while both are alive, similar to Plan 1. The estimated lifetime effective tax rate is approximately 6 percent over the long term in our straight-line projection. However, the effective tax rate in the year a spouse passes can jump meaningfully, often from a lower bracket to a noticeably higher one as filing status changes.

The legacy composition shifts as well. Approximately 62 percent of the legacy moves through as an Inherited IRA. Approximately 21 percent arrives as a Taxable Step-Up in Basis. Approximately 17 percent arrives as an Inherited Roth IRA.

The most important part of Plan 4 is not the legacy. It is what happens to the surviving spouse.

The Widow Tax: What Many Couples Never Plan For

When one spouse passes away, several things may change for the surviving spouse in ways that often go unaddressed in standard retirement planning.

First, the surviving spouse generally transitions from married filing jointly to single filer status. Tax brackets compress significantly under single filer status, often resulting in higher effective tax rates on similar levels of income.

Second, the standard deduction generally decreases. The same retirement income may be taxed more heavily simply because the filing status changed.

Third, Social Security generally reduces. The surviving spouse keeps the higher of the two benefit amounts, not both. In Mark and Carol's case, this means Carol would continue receiving approximately $3,100 per month rather than the combined $4,800 per month they previously received together. That represents a reduction of approximately $20,400 per year, permanently.

Fourth, Medicare IRMAA surcharges may increase. Higher income relative to the single filer thresholds can push a surviving spouse into a higher IRMAA tier, increasing Medicare premiums on a two-year lookback basis.

Fifth, Required Minimum Distributions from the Inherited IRA continue, often forcing taxable income in years when the surviving spouse may not need it.

Together, these factors are sometimes informally referred to as the widow tax, and they often catch surviving spouses by surprise during one of the most emotionally difficult periods of their lives. Ironically, household expenses often do not decline nearly as much as income after the loss of a spouse. Housing costs, property taxes, insurance, and many fixed expenses frequently remain similar, even though the household is now supported by one Social Security benefit instead of two.

This is one of the most important reasons we model surviving spouse scenarios inside coordinated retirement plans. Not because we expect the worst, rather preparing for it can create meaningful financial protection if it does occur.

Inherited IRA, Inherited Roth IRA, and Taxable Step-Up: Why the Account Type Matters

Many couples spend time on wills, trusts, and beneficiary designations, all of which matter. Yet, fewer couples pause to evaluate the account types themselves.

Under current law, an Inherited IRA generally results in ordinary income taxes for the beneficiary when distributions occur. Most non-spouse beneficiaries must fully distribute the account within ten years under the SECURE 2.0 ten-year rule.

An Inherited Roth IRA, under current law, may potentially pass qualified distributions tax-free, though most non-spouse beneficiaries still face the ten-year distribution rule.

A Taxable Step-Up in Basis applies to appreciated investments in a taxable brokerage account. Cost basis may step up to fair market value at death, often eliminating capital gains taxes for the heirs. There is no ten-year distribution requirement.

These are very different outcomes. Two families with similar total assets can pass very different after-tax legacies depending on which account types hold the wealth.

The question is not simply how much wealth may be left behind. The question is how much of that wealth may ultimately remain after taxes.

That is the part many couples never get to visually see. It is also one of the reasons coordinated retirement modeling can feel so different from a tax return or a basic investment review. A tax return shows you the past. Coordinated retirement modeling helps project what may happen in the future.

What Mark and Carol's Case Study Actually Reveals

Looking across all four plans, several things become clearer.

The cumulative lifetime taxes paid by 2051 differ between plans, but often by less than couples expect. In our model, Plan 1 produced approximately $788,904 in cumulative lifetime taxes. Plan 2 produced approximately $720,962. Plan 3 produced approximately $715,235. Plan 4 produced approximately $766,902.

The difference between Plan 2 and Plan 3, the moderate versus aggressive Roth conversion strategies, was approximately $5,700 in cumulative lifetime taxes. Yet Plan 3 required approximately $7,500 less in monthly spending during the conversion years.

That ratio matters. Aggressive conversions are rarely justified by tax savings alone in retirement scenarios like this one. They are usually justified, if at all, by legacy goals.

Perhaps the most surprising result from this case study was that dramatically different Roth conversion strategies produced far smaller differences in cumulative lifetime taxes than many people expect. The spending tradeoffs often proved far larger than the tax savings themselves.

The bigger insight is that none of these plans is universally correct or incorrect. Each one serves different priorities. A couple who values maximum lifetime spending may prefer something closer to Plan 1. A couple who values legacy to heirs may lean toward Plan 2. A couple deeply concerned about surviving spouse protection may take Plan 4 seriously and may also consider Roth conversions as a form of widow tax mitigation.

The right answer depends on what each couple actually values, not on any single calculation.

A Question Worth Considering

If someone showed you four different versions of your retirement, and each led to a different outcome for spending, taxes, legacy, and a surviving spouse, which one would you choose?

Why Coordinated Visual Planning Changes the Conversation

Most couples we work with do not need more information. They have read articles, watched videos, and spoken with friends. What they often lack is clarity on how all the moving pieces interact in their own specific situation.

When a couple sees four different plans built on their own real numbers, the conversation often shifts. They stop debating whether Roth conversions are good or bad in the abstract. They begin discussing what they actually want.

That is the deeper purpose of coordinated retirement modeling. Not to push a strategy. To help a couple see their options clearly enough to choose what fits their life.

The Awaken Planning Method

Stop guessing when you can retire, how much you can spend, or whether a Roth conversion actually improves your situation. For the first time, see it clearly.  For the first time, see it clearly. Your retirement age options, your real after-tax spending, and your personal numbers, built visually in your own plan. Many people spend additional years working simply because they never saw their options clearly.

Next Step: See Your Own Numbers Modeled

Throughout this article, we referenced visual plans, four-plan comparisons, legacy composition charts, and surviving spouse modeling. If you want to see exactly what those look like in action, the full case study video is available here: Should Retired Couples Do Roth IRA Conversions? 4 Plans Modeled (YouTube).

This kind of coordinated visual modeling, with four plans, tax impacts, legacy composition analysis, and surviving spouse scenarios, is exactly what we build inside our One-Time Wealth and Life Alignment Plan. It is not investment management. It is coordinated retirement planning. One engagement. One flat fee. Visual clarity built around your specific situation.

If you would like to apply for a One-Time Wealth and Life Alignment Plan, you can do so here: https://www.awakenfinancialdesigns.com/appointments

Awaken Financial Designs is headquartered in Cary, North Carolina, and in Arizona, serving people virtually nationwide in numerous additional states where appropriately licensed. We operate as a flat-fee fiduciary firm. We do not charge assets under management fees, which allows us to focus on coordinated planning rather than the size of an investment portfolio.

A Final Reflection

If you read this case study and quietly wondered what your own four plans might look like, that wondering is worth following. For many couples, this is where the real conversation begins. Not with a decision. With a clearer view of what may actually be possible.

Retirement planning is rarely about finding the perfect strategy. More often, it is about understanding the tradeoffs clearly enough to make decisions with confidence.

Thank you for being here with us.

Frequently Asked Questions

Should married couples do Roth IRA conversions in retirement? It depends. Roth conversions may potentially reduce lifetime taxes, lower future Required Minimum Distributions, and create a tax-free legacy under current law, but they often reduce current spending during conversion years. The right answer depends on income, tax bracket, legacy goals, healthcare costs, surviving spouse considerations, and other factors specific to each couple.

Is a Roth IRA conversion always a good idea for retired couples? No. While Roth IRA conversions may provide benefits in certain situations, they can also reduce current spending, increase Medicare IRMAA premiums, and create tax costs that may not be recovered during a couple's lifetime. The decision should be evaluated within a coordinated retirement plan.

What is the Roth IRA break-even analysis? A break-even analysis estimates when the long-term tax benefit of a Roth IRA conversion may catch up to the upfront tax cost. For many retired couples, break-even occurs late in life or primarily benefits heirs rather than the converting couple themselves.

What is the widow tax for surviving spouses? The widow tax informally refers to the financial impact a surviving spouse may experience, including transition to single filer status, lower standard deduction, reduced Social Security income, and potential increases in Medicare IRMAA surcharges. It can significantly affect after-tax income for the surviving spouse.

What happens to Social Security Benefits when one spouse passes away? The surviving spouse generally retains the higher of the two Social Security benefit amounts, not both. The lower benefit amount stops, which can represent a meaningful permanent reduction in household income.

How are Inherited IRAs taxed under current law? Inherited IRAs generally result in ordinary income taxes for the beneficiary when distributions occur. Most non-spouse beneficiaries are required to fully distribute the account within ten years under the SECURE 2.0 Act ten-year rule.

What is a Taxable Step-Up in Basis? Under current law, appreciated investments in a taxable brokerage account may receive a step-up in cost basis to fair market value at the original owner's death, often eliminating capital gains taxes for the heirs.

How do Roth conversions interact with Medicare IRMAA surcharges?Roth conversions increase taxable income in the year of conversion, which may push a couple into higher Medicare IRMAA tiers on a two-year lookback basis. Coordinated planning often considers IRMAA thresholds when modeling conversion strategies.

Are Inherited Roth IRAs tax-free to beneficiaries? Under current law, qualified distributions from an Inherited Roth IRA may potentially be tax-free to the beneficiary, though most non-spouse beneficiaries are still subject to the ten-year distribution rule.

What is a One-Time Wealth and Life Alignment Plan? It is a flat-fee, one-time engagement designed to give couples a comprehensive coordinated retirement plan, including retirement age modeling, after-tax income projections, Roth conversion analysis, legacy composition, and surviving spouse modeling. No ongoing assets under management. One plan. One fee.

Do you work with couples outside of North Carolina and Arizona? Yes, we work with married couples virtually nationwide where we are appropriately licensed. Our firm is headquartered in Cary, North Carolina, and registered in Arizona.

Disclosures: Awaken Financial Designs LLC | CRD #339725 | Flat-fee fiduciary RIA | Veteran and Woman Owned | Headquartered in Cary, North Carolina, with registration in Arizona. Virtual nationwide where appropriately licensed. This article is for educational purposes only and is not financial, tax, or legal advice. The case study presented is hypothetical and for illustrative purposes only. Names and identifying information have been altered for privacy. All figures are illustrative estimates based on straight-line projection assumptions. Legacy composition percentages assume no withdrawals and are presented for awareness only. Actual results will vary significantly based on individual circumstances. Tax laws are subject to change. Please consult qualified financial, tax, and legal professionals regarding your specific situation.