With the final tax payment due soon on tIRA to Roth conversion in 2010, I decided the review the cost. In thousands and round numbers:
tIRA value: $400
Converted: all
Tax paid on conversion: $34 (8.5%)
Change in IRA value since conversion: +$150
Bunching deductions helped lower the tax rate. With hindsight, for a tIRA mostly in equities 2010 was a great time to convert. By deferring tax payment about 3 years, there was additional time for investment returns, plus inside the Roth the boost in stock prices since 2010 is all tax-free.
tIRA value: $400
Converted: all
Tax paid on conversion: $34 (8.5%)
Change in IRA value since conversion: +$150
Bunching deductions helped lower the tax rate. With hindsight, for a tIRA mostly in equities 2010 was a great time to convert. By deferring tax payment about 3 years, there was additional time for investment returns, plus inside the Roth the boost in stock prices since 2010 is all tax-free.