The Boots Rule of Retirement Tax Planning
Here's how retirees can stop compounding tax leaks without large, expensive Roth conversions. The "boots rule" of retirement tax planning acknowledges a simple reality: most retirees don't have wads of cash hanging around. As Sam Vimes alluded to in Discworld, everyone would buy durable, high-quality boots if they could afford the upfront cost — or, put another way, retirees would make the "perfect" financial move if circumstances allowed. Nowhere is this clearer than in traditional retirement accounts. During your working years, deferring taxes offers an immediate, affordable benefit: get your employer's match, deduct your contributions today, then pay the taxes later. However, deferring taxes means deferring them on decades of compound growth, creating a mounting tax liability down the road. Then, when standard financial advice tells you to "just convert your 401(k) to a Roth IRA…
