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Beyond immediate tax benefits, converting to a Roth IRA can also provide long-term control over taxable income in retirement. As Caplinger noted, withdrawals from traditional IRAs are subject to taxation, and for retirees, high taxable income can lead to increased taxes on Social Security benefits. The IRS mandates minimum distributions from traditional IRAs at age 72, further complicating one’s tax landscape.
By choosing a Roth IRA, retirees can avoid mandatory withdrawals, allowing their investments to grow for extended periods. Furthermore, any distributions from a Roth IRA are tax-free, thereby insulating a retiree’s taxable income from unwanted increases that could affect Social Security taxation.