Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
A Good Time to Convert to Roth IRA?
Old 10-27-2008, 04:29 PM   #1
Recycles dryer sheets
 
Join Date: Aug 2005
Posts: 480
A Good Time to Convert to Roth IRA?

If your income is low enough to convert some or all of your "regular" IRA to a Roth, would this be a good time to do it? You'd be paying taxes on today's reduced value instead of the (hopefully) much greater value when the market has recovered and you are doing distributions.
Or, would this produce upside AND downside potential similar to simply rebalancing now? I'm not sure how to do the math on that one.
Is it 2010 when you can convert unlimited amounts to Roth, if the laws doesn't change?
__________________

__________________
Gearhead Jim is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 10-27-2008, 04:43 PM   #2
Thinks s/he gets paid by the post
jIMOh's Avatar
 
Join Date: Apr 2007
Location: Milford, OH
Posts: 2,085
When I convert, I sell $X of fund A in rollover and buy $X of fund A in Roth. This is not a rebalance, it is only a taxable event. Technically your asset allocation before and after should be the same.
__________________

__________________
Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.
jIMOh is offline   Reply With Quote
Old 10-27-2008, 04:45 PM   #3
Thinks s/he gets paid by the post
Rustic23's Avatar
 
Join Date: Dec 2005
Location: Lake Livingston, Tx
Posts: 3,624
Yes, it is the same, but what I think the OP meant was that rather than converting 500,000 last year, I only have 300,000 this year, so it would appear to be a good time to convert.
__________________
Rustic23 is online now   Reply With Quote
Old 10-27-2008, 06:07 PM   #4
Recycles dryer sheets
 
Join Date: Jul 2008
Posts: 401
I sure wish there were a way to offset all my tax-loss harvests against
Roth conversions. But I don't think there is.
__________________
RustyShackleford is offline   Reply With Quote
Old 10-28-2008, 03:56 PM   #5
Recycles dryer sheets
 
Join Date: Aug 2005
Posts: 480
Quote:
Originally Posted by Rustic23 View Post
Yes, it is the same, but what I think the OP meant was that rather than converting 500,000 last year, I only have 300,000 this year, so it would appear to be a good time to convert.
Yes, that's what I'm thinking. But is it in fact a good idea?
__________________
Gearhead Jim is offline   Reply With Quote
Old 10-28-2008, 04:08 PM   #6
Thinks s/he gets paid by the post
jIMOh's Avatar
 
Join Date: Apr 2007
Location: Milford, OH
Posts: 2,085
Quote:
Originally Posted by Gearhead Jim View Post
Yes, that's what I'm thinking. But is it in fact a good idea?
Up to the top of your tax bracket only is my advice.
Reference Room


Meaning if you are in 25% tax bracket and married, convert a max of 131,450
Meaning if you are in 15% tax bracket and married, convert a max of 65100

The caps above are for all taxable income, after adjustments and deductions.

Example, our Gross income is about 110k, we get about 45k of deductions each year, so taxable income is 65k. We have $100 of space to convert at 15% taxes (the 101st dollar is taxed at 25%).
__________________

__________________
Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.
jIMOh is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Is now the time to Convert from Traditional to ROTH IRA? laune75 Young Dreamers 6 11-03-2008 08:08 PM
(FAQ archive) Should I convert my IRA/401(k) to a Roth or not? Nords Early Retirement FAQs 0 10-16-2007 04:46 PM
Minimum time criteria for Roth IRA/401K whitestick FIRE and Money 3 06-01-2007 06:00 PM
IRA not deductible - convert to Roth someday? spncity FIRE and Money 6 02-20-2007 12:43 PM
Yet another reason to convert to a Roth IRA Nords FIRE and Money 5 02-13-2007 07:59 AM

 

 
All times are GMT -6. The time now is 09:09 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.