Tax Planning
in Fort Collins, CO

A Roth conversion moves money from a traditional IRA or 401(k) into a Roth account. You pay income tax on the amount converted today, in exchange for tax-free growth and tax-free withdrawals in the future. The strategy is straightforward. Getting the timing and amount right is where planning matters.

The window most worth paying attention to is the years between retirement and age 73, when Required Minimum Distributions begin forcing taxable withdrawals from traditional accounts. During this period, many retirees are in a lower tax bracket than they will be once RMDs kick in. Done systematically, multi-year Roth conversions can reduce lifetime taxes significantly, lower Medicare premiums, shrink the eventual RMD burden, and leave a more tax-efficient inheritance for heirs.

The wrong approach is to convert as much as possible in a single year. That can push you into a higher bracket, trigger IRMAA Medicare surcharges, and undo the very tax savings the conversion was meant to create. The right approach is to convert to the top of your current bracket each year, accounting for all income sources and thresholds.

IRMAA (Income-Related Monthly Adjustment Amount) is a Medicare surcharge that increases your Part B and Part D premiums when your modified adjusted gross income (MAGI) exceeds certain thresholds. In 2026, IRMAA begins at $109,000 MAGI for single filers and $218,000 for married couples filing jointly. Because Medicare uses a two-year lookback, income in 2026 affects your premiums in 2028.

This creates a meaningful planning constraint for Roth conversions. A large conversion in a single year can push your MAGI over an IRMAA bracket, adding hundreds of dollars per month to Medicare costs for that year. Depending on the conversion amount and the surcharge triggered, the Medicare cost increase can partially or fully offset the tax savings from the conversion.

The solution is not to avoid Roth conversions. It is to size them carefully, stay below the IRMAA thresholds that would cause a disproportionate cost, and spread conversions across years when needed. For clients near a threshold, we run the numbers both ways before recommending a course of action.

Most tax planning happens after the fact: looking back at what happened in a tax year and trying to minimize the damage. Pre-retirement tax planning is different. It looks forward: where will your income come from in retirement, what brackets will you be in, and what can you do now to improve that picture before the window closes?

The questions that matter most in this phase: Are you maximizing contributions to the right type of account, traditional versus Roth, given your current and projected tax rates? Do you have concentrated positions with large embedded gains that need careful unwinding? Is your business structured efficiently for the income it generates? Should you be doing partial Roth conversions now, while you're still working, before your income drops and the opportunity shifts?

Getting these decisions right requires a full tax picture, not just a current-year view. We build a multi-year tax projection for every pre-retirement client so the plan accounts for what is coming, not just what has already happened.

Required Minimum Distributions are annual withdrawals the IRS requires from traditional IRAs, 401(k)s, and most inherited retirement accounts beginning at age 73. The amount is calculated each year based on your account balance and an IRS life expectancy table. Miss a distribution and the penalty is 25% of the amount you should have taken.

But the real issue is not compliance. It is what RMDs do to your tax situation. A large traditional IRA can generate RMDs large enough to push you into a higher bracket, increase the taxation of Social Security benefits, trigger IRMAA Medicare surcharges, and create a significant tax burden for heirs who inherit the account. None of this is inevitable. It is the result of not planning early enough.

Strategies for managing RMD exposure include multi-year Roth conversions before age 73, Qualified Charitable Distributions (QCDs) for clients who are charitably inclined, and account positioning decisions that reduce what will eventually be subject to the RMD rules. For clients who are already taking RMDs, we coordinate the timing and sourcing of distributions to minimize tax impact across the full portfolio.

Tax-loss harvesting is the practice of selling investments that have declined in value to realize a capital loss. Those losses can offset capital gains elsewhere in your portfolio, reducing your tax bill. Up to $3,000 in net losses per year can offset ordinary income, and unused losses carry forward to future years indefinitely.

We look for tax-loss harvesting opportunities throughout the year, not just in December. Market volatility creates windows, and waiting until year-end means missing many of them. Harvested losses are tracked and deployed strategically against gains from rebalancing, asset sales, or other income events.

Long-term capital gains (assets held more than one year) are taxed at 0%, 15%, or 20% depending on your income. With careful income management, some retirees can realize significant gains at the 0% rate. Others, with higher income, need to plan around the additional 3.8% Net Investment Income Tax (NIIT) that applies above certain thresholds.

Capital gains planning also intersects with Social Security taxation, Medicare premiums, and bracket management. A large asset sale in the wrong year can simultaneously push you into a higher capital gains rate, trigger IRMAA, and increase the portion of Social Security subject to income tax. The same sale, timed differently or spread across years, can have a materially lower total tax cost.

Common situations requiring capital gains planning: selling a concentrated position, liquidating a rental property, receiving a large stock option exercise, unwinding an inherited portfolio, or funding a large one-time expense in retirement. Each of these has timing levers that are worth analyzing before acting.

Business ownership creates planning opportunities that do not exist for W-2 employees. The challenge is that most business owners are too busy running their business to use them systematically. The strategies that make the biggest difference — retirement account contributions, entity structure, income timing, and exit planning — require attention before the tax year closes, not after.

The Qualified Business Income (QBI) deduction allows eligible pass-through business owners to deduct up to 20% of qualified business income. Solo 401(k)s and SEP-IRAs allow significantly higher contribution limits than employee plans, reducing taxable income while building retirement savings. Entity structure. S-Corp versus LLC versus sole proprietor. affects self-employment taxes and how profits are distributed. And for qualifying small business stock, Section 1202 allows exclusion of up to $10 million in capital gains on a sale.

For business owners approaching an exit, the tax planning that happens in the years before a sale can matter more than the negotiated price. We work with business owner clients on exit timing, deal structure, and post-exit reinvestment strategy. Chase Grundy holds the CEPA® designation and focuses specifically on this transition. Learn more about our exit planning approach →

Colorado has a flat state income tax rate and taxes most forms of retirement income, including IRA and 401(k) withdrawals, pension income, and investment income. However, Colorado offers meaningful retirement income subtractions that reduce the amount subject to state tax. The subtraction is available to residents age 55 and older, with a larger amount for those 65 and older. Social Security income is fully exempt from Colorado state income tax.

For retirees in Fort Collins and northern Colorado, we integrate Colorado state tax into every income plan. Bracket management at the state level, the retirement income subtraction thresholds, and the interplay between federal and state tax obligations are all part of the full planning picture.