Kimberly-Clark Employees: Now Might Be a Good Time for a Roth Conversion

Healthcare Provider Update: Healthcare Provider for Kimberly-Clark: Kimberly-Clark does not typically provide direct healthcare services as a core aspect of its business. However, it does offer healthcare products under its brand portfolio, which includes items like medical gloves and protective wear used in various healthcare settings. The company primarily focuses on consumer products in personal care and hygiene, and while it may collaborate with organizations in the healthcare sector, it is not a traditional healthcare provider. Potential Healthcare Cost Increases for Kimberly-Clark in 2026: As we approach 2026, Kimberly-Clark and its consumers may face significant increases in healthcare costs due to anticipated steep hikes in health insurance premiums. The Affordable Care Act (ACA) marketplace is expected to see rate increases exceeding 60% in certain regions, driven by factors such as rising medical costs and potential loss of enhanced federal premium subsidies. Without intervention, these escalating premiums could drastically affect affordability for millions, with some policyholders at risk of experiencing up to a 75% rise in out-of-pocket expenses. This perfect storm of rising costs could pressure both Kimberly-Clark's employees and consumers, impacting the overall demand for its healthcare-related products. Click here to learn more

Changing traditional IRA assets to Roth IRAs during a bear market can provide significant tax savings and tax-free growth over time—and strategic planning with an advisor can help navigate that opportunity, says Michael Corgiat, of The Retirement Group, a division of Wealth Enhancement Group.

'Kimberly-Clark employees can take advantage of current market conditions and convert traditional IRA assets to Roth IRAs and enjoy tax-free growth now and in the future,' says Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement Group.

In this article we will discuss:

• 1. The upside to converting traditional IRA assets to Roth IRAs during a bear market.

• 2. How tax trade-offs and tax bracket management affect IRA conversions.

• 3. Benefits of Roth IRA rules - no RMDs for original account holder.

The current bear market may offer an opportunity to convert traditional IRA assets to Roth IRAs. Converted assets are taxed as ordinary income in the year of conversion—a big tax bill in that year. But if your traditional IRA assets have appreciated in value, you will be taxed on a lower asset base when you convert. All conditions are met, and no additional income tax liability for you or your beneficiaries from the Roth account will result from the account growth.

According to a new report from Employee Benefit Research Institute (EBRI), most retirees spend less in retirement than they did working years. And only 7% of retirees said they spent more in retirement than before retirement. That means retirees might not need so much retirement income after all, and converting traditional IRA assets to Roth IRAs might be a smart way to reduce taxes and increase retirement savings:

Tax Trade-Off

One reason to delay taxes on Kimberly-Clark retirement savings is that you may be in a lower tax bracket in retirement and a current tax deduction may be better than tax-free income in retirement. The Tax Cuts and Jobs Act's lowered rates expire after 2025 but might have changed your calculation. A cost-benefit analysis might reveal whether it makes sense to pay taxes on some of your IRA assets now rather than later. One strategy is to 'fill your tax bracket,' or convert an asset's value to keep your tax classification. This requires an estimate of your 2022 income.

Lower Values, More Shares

If you have traditional or Roth IRAs at the same custodian, you can typically transfer funds between the accounts. So when share prices are low, you can convert more shares for each taxable dollar and have more shares in your Roth account for tax-free growth. The converted assets could also lose value. You could also directly deduct taxes on the converted assets—which is generally unwise.

Two Time Tests

There are two five-year retention periods for Roth accounts: one for withdrawals of earnings and the other for conversions. Tax-free and penalty-free withdrawals of earnings, including earnings on converted amounts, must be within five years of the first Roth account opening date and must be made after age 59½ unless an IRS exception applies. This need not be a problem if you already have a Roth IRA, but could be if you open your first Roth IRA for the conversion.

Since you paid taxes at the time of conversion, assets converted to a Roth IRA can be withdrawn at any time without conventional income tax. However, you may be penalized by 10% if you withdraw the assets before the end of a different five-year period beginning on January 1 of each conversion year unless you are at least 59½ years old or under another exception.

More Favorable RMD Rules

Roth IRAs are not subject to required minimum distribution (RMD) rules while the original owner is alive—unlike traditional IRAs. Those whose spouse's Roth IRA is considered their own are also sheltered from RMDs during their lifetimes. Other inheritors of a Roth IRA must complete RMD requirements. In any event, distributions from a Roth IRA would be tax-free. The longer your investments can grow, the better tax-free income may be for you and your beneficiaries.

No investment strategy can guarantee success for Kimberly-Clark employees—all investing involves risk—including losing principal.

It's like planting seeds in a garden during a drought to convert traditional IRA assets to Roth IRAs in a bear market. As odd as it is to plant when supplies are tight, planting during a drought can produce a more plentiful harvest when the rains return. Likely, converting traditional IRA assets to Roth IRAs during a bear market will net you a lower tax bill and more tax-free growth in the long haul despite the initial tax hit. Like gardening, planning ahead and having patience will help.

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Sources:

1. 'Should I Do a Roth IRA Conversion When the Market Is Down?'  Thrivent ,  www.thrivent.com/insights/retirement-planning/should-i-do-a-roth-ira-conversion-when-the-market-is-down?utm_source=chatgpt.com . Accessed 27 Feb. 2025.

2. '2024 Spending in Retirement Survey.'  Employee Benefit Research Institute ,  www.ebri.org/content/2024-spending-in-retirement-survey?utm_source=chatgpt.com . Accessed 27 Feb. 2025.

3. 'Fight the Bear-Market Blues with a Roth IRA Conversion.'  Marshall Financial ,  www.marshallfinancial.com/roth-conversion-when-market-is-down/?utm_source=chatgpt.com . Accessed 27 Feb. 2025.

4. 'Leveraging Tax Advantages of Roth Conversion in Bear Markets.'  Kitces.com ,  www.kitces.com/blog/roth-conversion-bear-market-downturn-tax-savings-cost-conversion-averaging-isolate-ira-basis/?utm_source=chatgpt.com . Accessed 27 Feb. 2025.

5. 'Got an IRA? Here's How to Use the Bear Market to Your Advantage.'  Money ,  www.money.com/convert-roth-ira-bear-market/?utm_source=chatgpt.com . Accessed 27 Feb. 2025.