I read Pb4uski's posts on Roth conversion with great interest and I formulated a similar plan which is also similar to I-Orp reports show. I could use more fine tuning, of course.
DW is about 6 years younger than I (I am 57 3/4, and DW is 52 now). We both started our IT career the same time in US, so our SS number is almost identical. We both plan to ER in 2014, and our plan to start Roth conversion is to begin in 2015.
Our tIRA and 401K right now totaled 960K. The plan is to convert up to 15% tax rate ($72,500), and below 400% FPL ($92,200). So, below $72,500 is my income target. We have Muni bond interest, dividends etc, so we plan to convert $55,000 each year, and live off of our after-tax accounts.
The fine tuning is around when I should take SS and when DW should take SS. Below are the 4 scenarios in my spreadsheet:
1. Me (66), DW (67)
2. Me (66), DW (70)
3. Me (70), DW (67)
4. Me (70), DW (70)
For all 4 scenarios, we will covert the full $55,000 between I am 59 and I begin SS. Then convert partial amount (between $11,000 and $28,000 depending on my begin age) till DW begins her SS.
Scenario 4 will covert the most amount, about $650K and leaves $310K in tIRA when I begin RMD at 70 1/2 of age. I am using half of that to calculate as my own: $155K.
By then, we will have exhausted all our after-tax funds, and will have started to consume Roth funds. So, the only income will be our 2 SS and RMD (we have no meaningful pension amount). We may go over 15% tax rate by the time DW starts her portion of RMD.
Does this sound like a sufficient plan? Would you change any of the detail?
DW is about 6 years younger than I (I am 57 3/4, and DW is 52 now). We both started our IT career the same time in US, so our SS number is almost identical. We both plan to ER in 2014, and our plan to start Roth conversion is to begin in 2015.
Our tIRA and 401K right now totaled 960K. The plan is to convert up to 15% tax rate ($72,500), and below 400% FPL ($92,200). So, below $72,500 is my income target. We have Muni bond interest, dividends etc, so we plan to convert $55,000 each year, and live off of our after-tax accounts.
The fine tuning is around when I should take SS and when DW should take SS. Below are the 4 scenarios in my spreadsheet:
1. Me (66), DW (67)
2. Me (66), DW (70)
3. Me (70), DW (67)
4. Me (70), DW (70)
For all 4 scenarios, we will covert the full $55,000 between I am 59 and I begin SS. Then convert partial amount (between $11,000 and $28,000 depending on my begin age) till DW begins her SS.
Scenario 4 will covert the most amount, about $650K and leaves $310K in tIRA when I begin RMD at 70 1/2 of age. I am using half of that to calculate as my own: $155K.
By then, we will have exhausted all our after-tax funds, and will have started to consume Roth funds. So, the only income will be our 2 SS and RMD (we have no meaningful pension amount). We may go over 15% tax rate by the time DW starts her portion of RMD.
Does this sound like a sufficient plan? Would you change any of the detail?