84 • RUBY, WILDING & SWANSBURG But, in our ex perience, very few savers have diversified the tax status of their retirement funds, and that leaves the m exposed to legislative risk and the impact of rising taxes. If the majority of your retirement funds are saved in tax- deferred vehicles—IRAs, 401(k)s, and the likes—the n you’re likely o verexposed to tax r isk. Thankfull y, it’s not too l at e to t ak e a ction. That’s Right—It’s Not Too Late Just because you’ve saved your retirement funds under a certain tax status doesn’t mean they’re stuck in that tax status forever. It can feel daunting to make a change as you approach or enter retirement. But, the ris k of doi ng nothi ng coul d be fa r greater. I’ m here to tell you: You’ve got time to make any necessary adjustments. You have time to play the long game with taxe s. That wa s certainl y what Mart y a nd his w ife discovered. They look ed at t heir potential tax liability in his IR A (high) and their potential tax liability i n a tax-free vehicle (much lower) . T hey look ed at t heir current ex posure t o legislat ive risk an d rising tax es (hig h) an d thought about t heir p referred exposure (much lower). So, they decided to convert a portion of their retirement assets fro m his IR A into a tax- free account . They ended up converting about a third of Marty’s IRA, or around $200,000. This gave the m a hedge against rising taxes and allowed the m more stability and predictability in their future tax bills. Now obviously, everyone's situat ion is different , so t he solut ions th at work best for you will b e different a s well . W e aren't assuming that a Roth IR A conversion is the right move for everyone. What we are recommending, though, is that you
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