SoReadyToQuit
Confused about dryer sheets
- Joined
- Mar 1, 2018
- Messages
- 9
43 years old and plan to work 4-5 more years. Ideally I would have more in my taxable accounts and less in my tax deferred. I have one IRA (traditional) worth $50k. Of that, $18k is gains, $32k was contributed after tax (was married and exceeded all contribution limits -didn't know about back door roth contributions at the time.) When I quit working, my pension balance and 401k will become IRA money. After all deductions, my marginal tax rate today is combined 29% state and federal. I would pay $5,200 tax to convert the $50k IRA to a Roth (based on only taxing the $18k portion.) I'm wondering if I should do that this year to get some money transferred into my "available in 2023" bucket at 10% tax rate because once I convert my other accounts to IRAs, the $32k that I've already paid tax on will become really diluted. Moving this $50k over to my conversion ladder would go from being 64% tax free ($32k out of $50k) to 3% tax free ($32k out of $1 million.) Mathematically, the 3% non taxable portion of $1MM would provide the same result if all gets taxed eventually anyway...but I wondering if it's worth it to give me more money available in the "first five years" bucket of money that I plan to live on while building my ladder out. Is this faulty logic?