Ask Liz Weston

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Retirement

Q&A: Should I consider Roth conversions now or after I retire?

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Dear Liz: My husband and I both waited until age 70 to start Social Security. I will be 72 in September and am considering retirement. My husband is retired, 74, and taking required minimum distributions (RMDs). We have always tried to maximize contributions to our pre-tax retirement accounts and are now realizing the downside as we pay taxes on those mandatory withdrawals. Should I consider Roth conversions now or after I retire? I realize I will need to pay taxes on those conversions, but would it be best to do that when my income is lower? I am thinking about my kids and their future.

Answer: Late-in-life Roth conversions can be tricky. The amount you convert is removed from RMD calculations, lowering future tax bills. But the conversion is added to your current taxable income, potentially making more of your Social Security taxable and temporarily raising your Medicare premiums (thanks to income-related monthly adjustment amounts or IRMAA) in addition to generating a big tax bill.

Theoretically, a conversion could still make sense if your current tax rate is lower than the one you’ll have once you start required minimum distributions at 73. The case for conversion is strengthened if you want to pass this money to your kids. They likely would have to empty any inherited retirement account within 10 years, and they could be in their peak earning (and tax-paying) years when they do so. By converting now, you would in effect be paying the tax bill for them, perhaps at a lower rate than they might face, and allowing them to inherit the money tax-free.

A tax pro can help you with the calculations so you’ll understand the financial impact of a conversion. Then you can make an informed decision about whether to proceed.

Q&A: Could my husband’s ex claim his Social Security?

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Dear Liz: My question is regarding spousal Social Security. My husband and I have been married for close to 20 years. My husband’s first wife has never remarried. Could she be claiming my husband’s Social Security? If so, without us knowing it? And, how will that affect my Social Security when that time comes? Should mine be less than my husband’s, will I be able to claim my husband’s Social Security?

Answer: Strictly speaking, no one can claim anyone else’s Social Security. But someone can claim benefits based on the earnings record of a spouse or a former spouse under certain circumstances.

Specifically, your husband’s ex could claim a divorced spousal benefit based on your husband’s record, if that amount was greater than her own retirement benefit and the marriage lasted at least 10 years. She could receive up to half the amount he had earned as of his full retirement age. He does not need to be receiving his own benefit for her to receive a divorced spousal benefit, as long as he’s at least 62. He typically would not be notified that she had applied.

Claiming such a benefit doesn’t affect the amount your husband gets or that you might be entitled to. Your spousal benefit would also be up to 50% of the amount your husband had earned as of his full retirement age. For you to get a spousal benefit, however, your husband must have applied for his own benefit.

Q&A: Is a QLAC a good idea?

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Dear Liz: I read in a recent column that you mentioned qualified longevity annuity contracts (QLAC). I have heard about them before but don’t know the pros and cons about them. Is that something that you could write about in a future column?

Answer: QLACs are complicated enough to be beyond the scope of this column, but you can read an excellent summary by Morningstar’s Christine Benz at https://www.morningstar.com/personal-finance/can-qualified-longevity-annuity-contract-aid-your-retirement-plan.

QLACs are deferred, fixed-income annuities that pay out guaranteed income once you’ve reached a certain age (up to age 85). You can buy them with IRA money, up to a certain lifetime limit ($210,000 per individual in 2026). The amount you put into the annuity is excluded from required minimum distribution calculations until payouts begin.

Guaranteed income and reduced RMDs are definite “pros,” but buying one of these annuities is typically an irrevocable decision — you can’t get your money back if you need it for something else. Fixed-income annuities are also vulnerable to inflation, and it’s important to find a strong insurer, since you’re essentially buying a promise of future payments. Ideally, you’d hire a fiduciary, fee-only advisor to review the contract and your situation to make sure it’s a good fit before you buy.

Q&A: Should I delay my pension payments as long as possible?

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Dear Liz: I work for a local government and my job offers a pension as well as a 457 deferred compensation plan. If I delay starting my pension, will it have the same 8% growth that Social Security offers? Is my 457(b) plan much better than 401(k)?

Answer: Government pensions and Social Security both offer guaranteed income for life, but use different formulas for determining benefits.

Social Security is generally based on the worker’s 35 highest-earning years. Recipients can earn an 8% annual boost in their retirement benefit for each year they delay starting after their full retirement age, until benefits max out at age 70.

Pensions, meanwhile, are typically based on a combination of age, final salary and years of service. Delaying retirement typically does increase your benefit, but how much depends on the details of your plan. Many plans offer tools for estimating your future benefits, or you can contact your human resources department.

Your 457(b) plan has much in common with a 401(k). Both allow workers to contribute pretax money through payroll deductions up to certain limits ($24,500 in 2026, with an additional $8,000 catch-up contribution for those 50 and older, plus an additional $11,250 for those 60 to 63). The amount you ultimately get in retirement isn’t guaranteed but depends on how much you contribute and how the investments you choose perform over time.

A major difference between the two types of plans: 401(k)s typically offer some kind of matching funds, while 457(b)s often do not. On the other hand, early withdrawals from a 401(k) are usually penalized, while you can generally withdraw money from a 457(b) penalty-free after you leave your job.

Q&A: Broker made mistake calculating RMDS

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Dear Liz: While preparing our 2025 taxes, I noticed that our brokerage doubled the required minimum distributions for my husband and me for 2025. I called, and they said they were “running two systems” and sent a notice to investors to look for any problems. I do not recall ever receiving such a notice. Also, I did not notice the increase, as the bank used for these direct deposits also has multiple CDs, and the account is a “rainy day” fund that we use only for emergencies.

This money moved us into another tax bracket and we will be hit with a big tax bill. Also, we have lost out on future returns from the money that was distributed rather than left alone to grow. What is the brokerage’s responsibility? Do we just have to bite the bullet and pay the taxes on a mistake?

Answer: You had a 60-day window to return the excess withdrawal to your retirement accounts without incurring taxes, says Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting.

Assuming that window has passed, you can consider making a claim against the brokerage firm for the higher taxes and lost earnings. Start by making a written complaint to the brokerage firm’s compliance department. If you don’t get satisfactory results, you can file a complaint with the FINRA, the Financial Industry Regulatory Authority, at https://www.finra.org/investors/need-help/file-a-complaint.

Unfortunately, the IRS holds taxpayers responsible for correctly calculating and taking RMDs, even when their brokerage firms make mistakes. You would be wise to put reminders in your calendar to check your brokerage’s calculations as well as the actual distributions while you still have time to correct any errors. You may also want to consider consolidating your finances to make it easier to monitor your accounts.