Year-End Strategies: Making 2025 Market Gains Work for You
It’s hard to believe we’re already in the third quarter of 2025. This year has brought plenty of headlines, but for many investors, it’s been a welcome sight to see the equity markets posting low double-digit gains. While that’s great news for portfolios, it also means now is the perfect time to revisit your tax and retirement strategies before the year ends.
Why Now Is the Time to Revisit Your Plan
Stronger market performance creates opportunities—especially if:
You’re in a higher tax bracket, or
You’re approaching age 73 but don’t need to take Required Minimum Distributions (RMDs).
Regardless of whether you think tax rates are headed up or down, one thing is clear: they’re unlikely to go lower. That makes this a smart time to review whether a systematic Roth conversion strategy could help you maximize gains and minimize future tax burdens.
📌 Key Questions to Ask Your Advisor
- How much room do I have in my current tax bracket to convert this year?
- Would converting now help me avoid higher RMDs in the future?
- How could a Roth conversion impact my Social Security taxation or Medicare premiums?
- Should I convert a lump sum or take a gradual, multi-year approach?
- How does the recent market performance affect the timing of my conversion strategy?
Asking the right questions can help you uncover opportunities you might otherwise miss.
Understanding the Roth Conversion Advantage
The Roth IRA—introduced in 1997 and named after Senator William Roth—allows you to convert funds from a traditional IRA or 401(k) into a Roth account. The key is to do it strategically, using your current tax bracket to your advantage.
For example:
A couple filing jointly with $125,000 in income in 2025 sits in the 22% tax bracket. They wouldn’t cross into the 24% bracket until their income exceeds $206,701. That means they could convert up to $81,701 to a Roth IRA this year, paying taxes at their current rate and preserving those gains for tax-free growth in the future.
Benefits of a Strategic Conversion
A tailored Roth conversion plan can help you:
- Eliminate future RMDs – Let those assets continue growing tax-free for the rest of your life.
- Create tax-free income – Withdraw what you need, when you need it, without worrying about tax hikes.
- Reduce Social Security taxes – Roth income isn’t counted when determining if up to 85% of your Social Security benefit will be taxed.
- Avoid Medicare surcharge brackets – Roth distributions won’t push you into higher premium tiers.
- Leave a bigger legacy – Pass tax-free assets to your heirs while minimizing their tax burden.
Important Notes for Retirees
Anyone—no matter their age—can convert some or all of their eligible retirement assets to a Roth IRA. However, if you’re already 73 or older, your current year’s RMDs can’t be rolled into a Roth. (Stay tuned for part two of this series where we’ll share strategies for this situation.)
Take Action Before Year-End
This year’s market gains make 2025 an excellent time to consider a Roth conversion strategy. Acting before year-end could help you lock in today’s historically low tax rates, build more tax-free income flexibility, and position your portfolio for a stronger, more efficient retirement.
If you’d like to explore whether a Roth conversion fits your situation, let’s talk. A quick, no-obligation 10-minute call can help us review your numbers and create a plan tailored to your goals.
Securities and Advisory Services offered through LPL Financial. Member FINRA/SIPC. American Financial Consultants, Inc. is not an affiliate of LPL Financial.