Calculate 2019 Taxes to pack 22% Tax Rate

[RetireBy90]

While on topic of Roth conversions I’d like to see what the thought is on this. I’m currently in 22% bracket, 2019 will be first year of FIRE, so without wages I’ve been looking at converting. I Am 63 so have few years before RMDs. I can convert up to top of 22% but it will still have more RMD than I want at age 70.5.

Thinking of adding in 24% bracket to get the TIRA back to reasonable RMDs. Can’t see future but can’t think of any reason to hope for lower rates.

Are you doing conversions in 24% bracket or am I just crazy ?

 

[SevenUp]

While on topic of Roth conversions I’d like to see what the thought is on this. I’m currently in 22% bracket, 2019 will be first year of FIRE, so without wages I’ve been looking at converting. I Am 63 so have few years before RMDs. I can convert up to top of 22% but it will still have more RMD than I want at age 70.5.

Thinking of adding in 24% bracket to get the TIRA back to reasonable RMDs. Can’t see future but can’t think of any reason to hope for lower rates.

Are you doing conversions in 24% bracket or am I just crazy ?

How much to convert this year depends on what marginal rates you expect on withdrawals in future years.

If you can pay the tax from cash on hand, converting into the 24% bracket now may make sense. See this post in http://www.early-retirement.org/for...-income-optimization-99854-3.html#post2297322

Note that you are of an age that IRMAA costs may take effect. Calculating your marginal rates for 2019 and estimating them for future years (e.g., using the personal finance toolbox Excel spreadsheet) might be useful.

 

[RetireBy90]

Hadn’t considered the IRMAA, and DW is Medicare so need to figure that in. Thanks for reminding me.

Lots of moving pieces. Picked up about $50K in taxable from mom’s estate this year, And DW started SS. My first year without job, next year no big changes, so hopefully I can get a start with conversions this year and hopefully I’ll get better able to plan.

 

[Animorph]

I think with the 24% tax bracket you would be in danger of hitting the >$250,000 AGI health tax. My calculations have me avoiding AMT, $250k AGI, and sometimes state tax bracket changes. I can't just blindly convert to the top of the 22% tax bracket.

My RMD's will most likely come out at 22%. A few years ago my calculations encouraged Roth converting even a few percent above 22%. There is a benefit to Roth conversions even if your tax rate will be the same. Now that withdrawals are closer it looks like I should convert only at 22% and lower. A big market drop might also make a larger conversion worthwhile.

IRMAA hits me the end of this year, but my Roth conversions are large enough I think to make this a tolerable tax rate. Something to check for next year since I haven't modeled that yet.

Lots of things to consider, but I think it's mostly small potatoes when optimizing the size of Roth conversions. You don't have to do it perfectly.