There's a particular kind of financial regret that shows up in retirement — not from bad investments, but from tax decisions that seemed fine at the time and turned out to be quietly expensive. Most of them were avoidable with the right planning in advance.
What makes this frustrating is that none of these are obscure edge cases. They're patterns that show up consistently, across a wide range of affluent households, and they tend to share one thing in common: they happened because nobody was looking at the full picture before it was too late to do anything about it.
Here are the ones we see most often.
Ignoring IRMAA Until It's Too Late
IRMAA — the Income-Related Monthly Adjustment Amount — is the Medicare premium surcharge that applies when your modified adjusted gross income crosses certain thresholds. In 2025, a couple with MAGI above $212,000 pays meaningfully higher Medicare Part B and Part D premiums. At higher income levels, the surcharges stack up further.
What catches people off guard is that IRMAA is calculated based on income from two years prior. A large Roth conversion, a business sale, or an active year of capital gains in 2024 can affect Medicare premiums in 2026 — often by thousands of dollars per person, per year. Couples who don't model this in advance sometimes face premium increases they weren't expecting and can't undo.
This doesn't mean avoiding income or conversions. It means making sure large income events are weighed against their Medicare cost before they happen, not after. The hidden cost of waiting on a Roth conversion is real — but so is the cost of converting too much in the wrong year. This piece on Roth conversion timing explains how to think about the window carefully.
Taking Large RMDs Without a Strategy
Required minimum distributions begin at age 73 for most people born between 1951 and 1959. For those who have spent decades accumulating inside traditional IRAs and 401(k)s, these distributions can be substantial — and they arrive as ordinary income, taxed at the same rate as wages.
The mistake isn't the RMD itself. The mistake is letting a large IRA balance build without ever thinking about the exposure it creates, then being forced into large taxable distributions at exactly the time when other income sources — Social Security, pension, investment income — are already filling up the brackets.
The window to mitigate this is the years before RMDs begin. Roth conversions, qualified charitable distributions, and thoughtful sequencing of income sources can all reduce the long-term tax burden significantly. If you have a large IRA and haven't run the numbers on what RMDs will look like at 73, 75, and 80, that's worth doing now. This overview of what happens with a large inherited IRA shows how quickly the tax burden compounds when distributions are forced rather than planned.
Stacking Capital Gains on Top of Other Income
The federal long-term capital gains rates — 0%, 15%, and 20%, plus a potential 3.8% net investment income tax — are tied to your total taxable income. That means a year where you also have a large Roth conversion, a business sale, or significant ordinary income can push gains that would have been taxed at 15% into the 20% bracket, plus NIIT, without anyone realizing it until the tax return is filed.
The interaction between income sources isn't always obvious, and running the math before year-end matters more than most people realize. This is planning that's worth doing in October, not April. By the time your CPA sees the return, the decisions have already been made. For a broader look at how your tax return reveals planning gaps that could have been addressed ahead of time, this piece on what your tax return tells a financial advisor is worth reading.
The Widow Tax Trap
This one is genuinely painful to see, because it's almost entirely preventable with early planning. When a spouse passes, the surviving spouse typically moves from married filing jointly to single filing status the following year. That shift can dramatically increase their effective tax rate — lower standard deduction, compressed brackets, higher Medicare surcharges — often at a time when their financial picture is already disrupted by grief and administrative complexity.
Couples with significant IRA assets who do Roth conversion planning specifically to reduce the future RMD burden for a potential surviving spouse are often doing the most meaningful long-term tax planning available to them. The math on this is striking, and it's one of those situations where acting while both spouses are healthy creates options that simply don't exist later. For context on how estate and survivor planning interact with investment accounts, this piece on what actually happens to your money when you die addresses several of the gaps families discover too late.
Inherited IRA Mistakes
The SECURE Act changed the rules significantly for inherited IRAs. Most non-spouse beneficiaries who inherit IRAs after 2019 are now subject to a 10-year distribution rule — the account must be fully distributed within 10 years of the original owner's death. IRS guidance has further clarified that if the original owner had already begun taking RMDs, annual distributions are generally required in years one through nine, with the remainder due in year ten.
The tax mistake here is either ignoring the 10-year clock entirely — leading to a massive forced distribution in year ten — or failing to think about which beneficiaries are best positioned to receive IRA assets based on their own tax situations. A child in their peak earning years receiving a large inherited IRA distribution on top of their own income can face a very high effective rate on those dollars. These aren't hypothetical risks. This guide to inheriting a $3M IRA covers the new rules and the most common mistakes in detail.
Asset Location Mistakes
Holding high-yield bonds, REITs, or other income-producing assets inside a taxable account — where interest and dividends are taxed annually at ordinary income rates — when those same assets could be held inside a tax-deferred IRA is a quiet drag that compounds over time. Conversely, holding long-term equity exposure inside a traditional IRA converts what would have been preferentially taxed capital gains into ordinary income at withdrawal.
Asset location isn't glamorous, but across a ten-to-twenty-year retirement the difference between a portfolio that's thoughtfully positioned across account types and one that isn't can add up to a meaningful amount. This is one of the areas where working with an advisor who sees your full account picture — not just one account in isolation — makes a real difference. For a comprehensive look at how tax-efficient portfolio management works at the $3M+ level, the Wealthy Investor Playbook covers the mechanics in depth.
What Most of These Have in Common
They're planning failures, not investment failures. The markets didn't cause them. A lack of proactive, integrated tax planning did — often because the investment advisor, the CPA, and the estate attorney were each doing their own job without a shared view of the bigger picture.
The families who tend to avoid these mistakes work with advisors who coordinate across all three areas, anticipate problems before they become expensive, and run the numbers before the year closes rather than after.
If you'd like a second opinion on whether your current plan is addressing these risks, we'd welcome the conversation.
Tax mistakes in retirement are almost always avoidable — with the right planning in advance. We work with affluent families throughout the St. Louis area to build coordinated tax, investment, and estate strategies that address exactly the issues covered above.
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John Wahl is a CFP® and ChFC®, co-founder of One Bridge Wealth Management, and was named to the Forbes 2025 Best-In-State Next-Gen Wealth Advisors list. One Bridge is a fee-based independent wealth advisory practice serving high-net-worth families in the St. Louis area. One Bridge Wealth Management acts as a fiduciary when managing assets. John was named to Forbes' Best-In-State Next-Gen Wealth Advisors list — one of the most competitive independent rankings in the financial advisory profession. View the full list. 2025 Forbes Top Next-Gen Wealth Advisors, created by SHOOK Research. Presented in Aug 2025; based on 03/31/25 data. Advisors pay a fee to hold out marketing materials . Not indicative of advisor’s future performance. Your experience may vary. This content is for informational purposes only and does not constitute personalized tax or investment advice. Please consult a qualified tax professional regarding your specific situation.