Case Study: From “Work Optional” to Fully Retired with Strategic Roth Conversions in Minnesota
- Michael Urch
- 6 days ago
- 5 min read
The Challenge: Managing the High-Stakes Tax Window of Early Retirement
Melissa and Mike* had been clients of 360 Financial for several years. They were organized, financially disciplined, and had accumulated substantial assets across retirement, Roth, and taxable investment accounts.
As a CERTIFIED FINANCIAL PLANNER,™ Michael guides clients on insurance planning, investment planning, retirement income planning, tax planning, and estate planning. Michael is a professional advisor who puts planning before products.
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On paper, retirement was achievable.
In fact, for years, we’d been telling Melissa that she was “work optional.”
Melissa had finally reached a point where she no longer enjoyed her job, and the numbers supported her decision to retire. The couple’s financial plan supported retirement. But the decision involved more than simply leaving the workforce.
Melissa’s income was about to shift dramatically.
She would have a partial year of earnings followed by no salary at all. In addition, they wanted to delay Social Security intentionally and had multiple account types to draw from.
Importantly, they intended to leave a significant legacy to their children.
Their decision wasn’t just about choosing a retirement date. It was a tax strategy decision with multi-generational consequences.
In essence, Melissa and Mike wanted to minimize taxes now and in the future so they could leave a legacy and retire with confidence.
They needed coordinated tax and legacy planning.
The Solution: Coordinated Retirement and Tax Planning
When Melissa decided to retire, the transition created a critical planning window.
Her income dropped substantially, giving the couple far more control over the taxable income they recognized each year. Instead of simply beginning withdrawals, we focused on how income should be structured.
With Social Security delayed and living expenses already covered by their assets, they had flexibility. That flexibility allowed us to intentionally use lower tax brackets while they were available.
Melissa and Mike chose to maximize the 24% federal tax bracket through Roth conversions.
Funds were moved from traditional IRAs to Roth accounts, and the amount converted was recognized as taxable income in the year of conversion. We executed conversions in the low six figures, which represented an aggressive strategy by most standards.
The reasoning was this: paying tax now at a known, controlled rate enabled future tax-free growth in the Roth under current tax law.
When their adult children eventually inherit those assets, distributions are expected to be free of federal income tax, subject to required distribution timelines under current law. Rather than allowing taxes to compound in the background, they deliberately chose to address them head-on.
Here’s how it worked:
Funds were moved from a traditional IRA to a Roth IRA.
The converted amount became taxable income in the year of conversion.
Future growth inside the Roth will not be taxed as income.
Note: Under current federal law, inherited Roth IRA distributions are income-tax-free, although beneficiaries must follow required distribution timelines.
Why This Worked: Integrated Planning Across Every Discipline
This strategy worked because retirement planning was not treated in isolation.
Investment management, tax strategy, retirement income design, and estate considerations were all evaluated together.
The timing was critical. Had the couple attempted the same Roth conversions while both were earning full professional salaries, the income would have pushed them into a 30%+ bracket. The strategy would not have made financial sense if it had been done that way.
Retirement reduced their taxable income, giving them room to strategically use the 24% bracket.
Because they had sufficient assets to fund their lifestyle and pay the associated taxes, they could convert strategically without jeopardizing their retirement security.
Ongoing annual tax return reviews and proactive bracket management ensured that decisions were intentional rather than reactive. Everything was coordinated to support both their lifetime goals and their children’s future inheritance in Minnesota.
Key factors that made the strategy effective:
Lower income in retirement created room inside the 24% bracket
Delaying Social Security preserved flexibility.
Multiple account types allowed intentional withdrawal sequencing.
Sufficient assets to fund retirement comfortably and pay the tax due on conversions
Annual tax return reviews enabled proactive planning rather than reactive adjustments.
The Outcome: Relief, Confidence, and a Stronger Legacy
The emotional shift was immediate.
Melissa experienced significant relief in leaving a job she no longer enjoyed. The concept of being “work optional” finally became reality.
Financially, they did more than retire. Together, we deliberately structured their income, managed long-term tax exposure, and designed a tax-efficient legacy plan for their children. The conversation moved beyond “Can we afford to retire?” to “How do we minimize taxes across generations?”
Financially, they achieved:
A retirement plan designed to support their goals
A tax-optimized income strategy
Reduced long-term tax exposure
A structure designed to minimize the tax burden on their children
For Melissa and Mike, retirement was not simply the end of a career. It was a strategic transition executed with clarity and intention.
Summary of Key Points
Melissa’s post-retirement income drop created a unique opportunity to control taxable income and manage tax brackets.
Melissa and Mike shifted a large portion of their retirement savings into tax-free Roth accounts. They did this specifically up to the 24% tax limit to keep their current tax bill manageable while creating a tax-free inheritance for their heirs.
Their plan minimizes current taxes while preserving their children’s future inheritance from significant income tax burdens.
Success came from coordinating investment, tax, and estate strategies simultaneously rather than treating retirement in isolation.
*This case study is based on a real client experience. Client names and certain identifying details have been changed to preserve privacy. Each financial situation is unique, and the strategies described may not be appropriate for every individual. Readers are encouraged to consult a qualified financial and tax professional before making investment or planning decisions.
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About the Author
Michael Urch
As a CERTIFIED FINANCIAL PLANNER,™ Michael advises his clients on insurance planning, investment planning, retirement income planning, tax planning, and estate planning. He prides himself on being a professional advisor who puts planning before products. This is one of the reasons he was attracted to 360 Financial’s client-focused culture. Michael likes to start with each client’s “why.” By understanding what’s truly important to them, the “what” of investment and planning strategies can be custom-designed to support their long-term ambitions.
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360 Financial is an independent wealth management firm with a team of specialized financial advisors and financial planners. As fiduciaries, 360 Financial’s advisors provide services to business owners, entrepreneurs, and professionals. We help investors with sudden wealth, retirement planning, tax planning, estate planning, and business financial planning.
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