What a CPA Actually Does

For thirty years your taxes took an evening. W-2 from your employer, maybe a 1099 from your savings account, standard deduction, done. TurboTax asked you twelve questions and handed you a refund number. You never thought about tax strategy because you didn’t need one. Your employer withheld the right amount. Your financial life fit on a single screen.

Then you retired. You rolled your 401(k) into a traditional IRA. Now you have that IRA, a Roth IRA, a taxable brokerage account, Social Security income that may or may not be taxable depending on your other income, required minimum distributions starting at 73, Roth conversion opportunities that expire when those RMDs begin, and Medicare premiums that spike if your income crosses a threshold you didn’t know existed. Every withdrawal decision changes your tax bill. Every tax decision changes your Medicare premiums. Every Medicare premium change affects how much you can afford to withdraw.

The tax code didn’t get harder. Your situation did.

What the Letters Actually Mean

CPA stands for Certified Public Accountant. It is a state-issued license with real barriers to entry.

The path: 150 semester hours of college coursework, which is 30 credits beyond a standard bachelor’s degree. Then the Uniform CPA Exam, a four-part test covering auditing, business law, financial accounting, and taxation. The pass rate hovers around 50% per section, and many candidates take sections multiple times. After passing, you need one to two years of supervised experience under a licensed CPA. Then you apply for your state license. Then you maintain it with 40 hours of continuing education every year, for the rest of your career.

This is materially different from “person who does taxes.” The seasonal tax preparer at a strip-mall chain completed a training course measured in weeks. The CPA completed a process measured in years. Both can file your return. Only one is trained to tell you whether you should be doing a Roth conversion before you file that return.

The licensing is state-by-state, which means a CPA licensed in Ohio cannot practice in Florida without meeting Florida’s requirements. It also means you can verify any CPA’s license status on your state’s board of accountancy website in about two minutes. Do that.

The Hierarchy: Who Does What

Not everyone who touches your tax return has the same training, authority, or cost. The differences matter.

Option	Typical Cost	What They Do	What They Don’t Do
Tax software (TurboTax, FreeTaxUSA)	$0-$200	Handles W-2s, 1099s, standard deductions, basic itemizing. Walks you through the forms.	No strategic advice. Fills out forms based on decisions you already made.
Tax preparer (PTIN holder)	$200-$400	Seasonal worker who enters your documents into professional software. Catches data-entry errors.	No planning. No representation if you’re audited. No license.
Enrolled Agent (EA)	$250-$500	Federally licensed by the IRS. Can represent you in audits. Specializes in tax compliance.	Generally focused on individual tax situations, not broad financial strategy.
CPA	$300-$700	State-licensed. Trained in strategy and compliance. Can advise on planning, file returns, and represent you before the IRS.	Not a financial planner. Not an attorney. The credential alone doesn’t guarantee retirement specialization.

The EA deserves a note. Enrolled Agents pass a three-part IRS exam and maintain their license through continuing education. An EA who specializes in individual retirement tax returns may know more about your specific situation than a CPA who spends most of the year auditing corporate financial statements. The credential matters, but specialization matters more.

When You Actually Need a CPA

Your working years had maybe three tax decisions, and getting them wrong cost a few hundred dollars. Retirement has a dozen, and getting them wrong costs tens of thousands over a decade.

Which accounts to withdraw from first. Drawing from a traditional IRA before touching your taxable brokerage triggers ordinary income tax on every dollar. Drawing from the taxable account first might let you do Roth conversions in a lower bracket. The sequencing changes your lifetime tax bill by tens of thousands of dollars.

How much to convert from traditional to Roth each year. The window between retirement and age 73 (when RMDs start) is the most valuable tax planning opportunity most retirees will ever have. Convert too much and you jump into the 24% bracket unnecessarily. Convert too little and your RMDs will force you into that bracket anyway, for the rest of your life.

When to claim Social Security. Benefits are tax-free for some retirees and up to 85% taxable for others, depending on your combined income. The claiming decision interacts with your conversion strategy, your withdrawal sequencing, and your Medicare premiums.

How to stay under IRMAA thresholds. IRMAA (Income-Related Monthly Adjustment Amount) is a Medicare surcharge for higher earners. If your modified adjusted gross income exceeds $103,000 (single) or $206,000 (married filing jointly), your Part B and Part D premiums jump. The surcharges are based on income from two years prior. A large Roth conversion in 2026 raises your premiums in 2028. Tax software does not warn you about this.

These decisions interact. A CPA who understands retirement tax planning runs the numbers across all of them at once, saving you $3,000-$10,000 per year. Tax software fills out forms after you’ve already made the decisions. It doesn’t tell you the decisions were wrong.

How the CPA and Planner Work Together

Your planner says “convert $50,000 this year.” Your CPA runs the numbers and says “you can convert $47,000 before hitting the bracket ceiling, and $50,000 would trigger an IRMAA surcharge in two years.” The planner adjusts. That five-minute conversation saves you real money.

The planner designs the strategy: withdrawal sequencing, Roth conversion targets, Social Security timing. The CPA implements the tax side: filing the returns, tracking cost basis, calculating quarterly estimated payments, and flagging when the plan’s assumptions don’t match the actual tax math. Neither replaces the other. The planner without a CPA is designing strategy without verifying the numbers. The CPA without a planner is filing returns without questioning the strategy.

If you don’t have a planner yet, that’s fine. Hire the CPA first. A good CPA doing proactive tax planning is more valuable than a planner without anyone to verify the math. You can add a planner later when your situation warrants it. Selecting a Financial Planner covers how to find one when you’re ready.

Worked Example

Carol and Robert are both 63 and retiring this year. Their financial picture:

$900,000 in traditional IRAs
$200,000 in a taxable brokerage account
$50,000 in Roth IRAs
A paid-off home
No pension

Their planner’s strategy: convert $50,000 per year from traditional to Roth during ages 63-67, before Social Security and RMDs begin. Draw living expenses from the taxable account during these bridge years. Carol claims Social Security at 67. Robert delays to 70 for the larger benefit.

What the CPA does, year by year:

Year 1 (age 63). Files the return showing $50,000 in Roth conversion income and $12,000 in capital gains from taxable account withdrawals. Calculates quarterly estimated tax payments for next year to avoid the underpayment penalty. Confirms the total income keeps them in the 22% bracket and under the IRMAA threshold of $206,000 for married filing jointly.

Year 3 (age 65). Robert picks up a $15,000 consulting gig. The CPA catches this before year-end and adjusts the Roth conversion amount down to $38,000. After the standard deduction, their taxable income ($38,000 conversion + $15,000 consulting + $10,000 capital gains, minus the ~$30,000 standard deduction) stays in the 22% bracket. Without the adjustment, they would have converted the full $50,000 and pushed $12,000 into the 24% bracket. That saves $240 in federal tax on one adjustment. These calls happen several times a year across bracket ceilings and IRMAA thresholds.

Year 5 (age 67). Carol claims Social Security at $2,200 per month, or $26,400 annually. The CPA recalculates how much of her Social Security benefit is taxable. At their income level, 85% of it ($22,440) counts as taxable income. The CPA adjusts the Roth conversion down to $30,000 to accommodate the new income stream without crossing into the 24% bracket or triggering IRMAA. Tax software would have filed the return accurately after they’d already made the conversion. It would not have told them to convert less.

The math over five years:

	Cost
CPA fees (5 years at ~$600/year)	$3,000
Estimated tax savings from optimized conversions and bracket management	$12,000-$25,000
Net benefit	$9,000-$22,000

The savings come from coordinating decisions that tax software treats as separate inputs.

How to Find and Evaluate a CPA

Start with your state’s board of accountancy website. Every state maintains a searchable database of licensed CPAs. If someone claims to be a CPA and their name doesn’t appear, walk away.

Look for specialization. The CPA credential covers auditing, corporate accounting, and tax. You want a CPA who focuses on individual tax planning for retirees, not one who spends 90% of the year auditing restaurant chains. Ask directly.

Five questions for the first conversation:

Do you work with retirees navigating Roth conversions and RMDs? You want someone who does this regularly, not someone figuring it out for the first time with your money.
How many clients in my situation do you serve? A CPA with fifty retirement-age clients has seen the patterns. One with three is still learning.
Do you coordinate with financial planners? If they look puzzled by the question, they’re used to filing returns, not doing proactive planning.
What’s your fee structure? Expect $300-$700 for annual return preparation, plus $100-$300 per hour for planning consultations and tax projections. Avoid CPAs who won’t quote a fee range before the engagement.
Will you do tax projections, not just file returns? This is the line between a tax preparer with a CPA license and a tax strategist. Filing looks backward. Projections look forward. You need both.

Your financial planner may already have a CPA they work with. That’s a good starting point, because the coordination matters and an existing relationship makes it smoother.

Where This Breaks

A CPA is not always the right answer. Three situations where the cost doesn’t justify itself.

Simple retirement income. If your retirement consists of Social Security plus a pension and you take the standard deduction, your return is straightforward. You don’t have conversion decisions, withdrawal sequencing questions, or IRMAA concerns. TurboTax handles this for $80. A CPA adds cost without adding value.

Wrong specialization. A CPA who spends most of the year on corporate audits or small-business bookkeeping may know less about retirement tax planning than an Enrolled Agent who files 200 individual returns a year for retirees. The three letters don’t guarantee the right expertise. Ask about their practice focus before you assume the credential matches your needs.

Filing without planning. A CPA who files your return once a year in April and never contacts you the other eleven months is not doing tax planning. They’re doing tax preparation with a more expensive license. The value of a CPA for retirees comes from proactive work: running projections in October, adjusting conversion amounts before December 31, flagging IRMAA thresholds before you cross them. If your CPA only talks to you during tax season, you’re paying for a credential you’re not using.

Try It Now

Four steps. Do them this week.

Step 1: Assess your complexity. If you have income from multiple account types (traditional IRA, Roth, taxable brokerage, Social Security), if you’re considering Roth conversions, or if you’re within five years of retirement, your tax situation has enough moving parts to justify professional help.

Step 2: Verify before you hire. Go to your state’s board of accountancy website and look up any CPA you’re considering. Confirm their license is active and in good standing. This takes two minutes and is free.

Step 3: Gather your documents. Before your first meeting, pull together last year’s tax return, current account statements for every retirement and brokerage account, your most recent Social Security statement (ssa.gov), and a list of your three biggest tax questions. A CPA who sees an organized client takes that client more seriously.

Step 4: Schedule a consultation, not a tax appointment. Call during summer or fall, not during tax season. Ask about tax planning for the coming year, not about filing last year’s return. A CPA who does proactive planning will welcome the call. One who only does preparation won’t know what to do with it. That tells you everything.

What’s Next

Your CPA handles the tax math. The other professionals in your team handle strategy and legal structure.

Selecting a Financial Planner covers how to find a fee-only fiduciary who designs the withdrawal and conversion strategy your CPA implements. Estate Planning Basics explains the legal documents that determine what happens to your assets, including how account titling and beneficiary designations interact with your tax situation.