0% Capital Gains vs. Roth Conversions: How to Optimize in Your Financial Plan?

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And when it comes to keeping more of your money in your pocket instead of Uncle Sam’s, there’s a powerful—but often overlooked—strategy at play: tax-rate arbitrage.

What to Know: This article dives into the tension between two smart tax strategies—low-tax Roth conversions and harvesting capital gains at the 0% tax rate—and explains how choosing the right one (at the right time) can potentially unlock thousands of dollars in tax savings over your lifetime. So, how do you decide which takes priority? The answer lies in understanding how your tax rate will change over time—and how different types of income are “stacked” in the eyes of the IRS.

Key Takeaways:

📌 Roth conversions may make sense early in retirement when your income is lower, allowing you to lock in low tax rates now to avoid higher ones later during Required Minimum Distributions (RMDs)

📌 0% capital gains are best harvested when your income is modest, helping you raise your portfolio’s cost basis with zero tax consequences

The Bottom Line: Taxes don’t end when your paycheck does. A thoughtful, forward-looking tax strategy could be one of the most meaningful gifts you give to your future self—and your family.