Most clients arrive with money in three buckets: taxable, pre-tax, and Roth. We work the math year by year. We look for windows where a Roth conversion is likely to save more in lifetime taxes than it costs that year. And we plan the order in which those buckets get used so the household’s tax rate stays as steady as possible through retirement.
What we do not do is prepare the return. That work belongs with the CPA. Our planning informs the return; we do not file it.
Pre-retirees and retirees with wealth in multiple accounts
Clients who want the tax planning strategy handled inside the same practice as their investments and retirement income.
Clients with significant pre-tax savings and children likely to inherit at a higher tax rate.
Recent retirees who may have a window to convert before required withdrawals begin.
Tax-aware planning
The line between tax planning and tax preparation can be unclear. We keep it explicit. Tax-aware planning runs underneath the portfolio and the retirement income work, and we coordinate with your CPA on the return. If you do not have a CPA, we’ll recommend one; we do not absorb that work into our practice.
Frequently asked
No. We are tax-aware planners. We model your bracket year over year, plan Roth conversions and distribution order, and coordinate with your CPA who prepares and files the return. The two services run alongside each other; they are not the same job.
A Roth conversion moves money from a traditional pre-tax retirement account into a Roth IRA, where future withdrawals are tax-free. The conversion creates taxable income in the year it is made. It often makes sense in years when the household’s tax bracket is unusually low, when required withdrawals have not yet started, or when the heirs are likely to inherit at a higher rate than the household currently faces.
Yes. California’s top brackets are among the highest in the country, which raises the cost of a conversion done while the household is a California resident. For some households the answer is to convert less while a resident in California; for others, the math still favors the conversion if the lifetime tax savings remain large. We model the state piece explicitly rather than assuming federal rates are the whole story.
The order depends on your tax picture, the projected required withdrawals from your pre-tax accounts, the timing of Social Security and Medicare, and what your heirs are likely to owe. For many clients, drawing partly from taxable and partly from pre-tax in the early retirement years preserves Roth balances for later, keeps the tax rate steadier, and reduces the sting of required withdrawals when they arrive.
Your CPA prepares and files the return. We share the planning model and the year’s transactions ahead of return season so the CPA has what they need. Where the return surfaces a question that affects the plan (a deduction we did not anticipate, a change in California residency status), we revisit it at the next review.
Neither Three Points Wealth Planners nor &Partners renders legal or tax advice. Please consult your tax or legal advisors before taking any action that may have tax consequences.
