Earn $200,001? That Extra Dollar Costs You $3,800 in Taxes

The Net Investment Income Tax creates a hidden cliff at specific income thresholds that catches retirees by surprise

The Details

Roth conversions don't trigger NIIT directly, but they increase your MAGI and could push your other investment income over the threshold. A $50,000 conversion could cost you $3,800 extra on unrelated dividend income.

What this means for you

Retirement decisions compound — getting one of these details wrong can cost tens of thousands of dollars over a retirement. The good news: most of these mistakes are completely avoidable if you understand how the rule actually works.

Next step

If you want to see how this applies to your specific situation, take the free Retire Ready Score — a 2-minute assessment that scores your current plan across income, taxes, healthcare, and protection.