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Old 12-14-2018, 06:15 AM   #1
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More Roth conversion questions

I will be retiring in May and my wife will work till the end of the year. I'll be 62 and she will be 59.
A big part of our retirement budget will be qualifying for ACA subsidies. I just converted $10,000 from my IRA to a Roth, not having taxes taken out. This will basically bring my normal tax return to about zero. This should be plenty (with what I already have in my Roth) to get me to 65. But then we'll need 3 more years to get my wife to 65. Depending on how the market does she may or may not have enough in her and what's left of my Roth.
So my question is, while I know taking taxes out of the converted money is frowned upon, I wonder if it makes sense in my case?
What are the negatives besides the fact you have less money in your account going forward? I would maybe need to convert $50K at most to insure we'd have enough. We're in the 12% tax bracket so it would be about $8K in taxes, fed and state. But this could save us thousands if we don't qualify for as much in ACA subsidy.

Anything I'm missing here? Thanks for any help.

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Old 12-14-2018, 06:44 AM   #2
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Originally Posted by garyt View Post
.... Anything I'm missing here? Thanks for any help.
Nope. I think it is frowned upon only because it is suboptimal compared to converting and paying the taxes from taxable funds.

But... between the two of you, you don't have $8k in taxable funds to pay the tax?

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Old 12-14-2018, 09:58 AM   #3
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The savings on the ACA will take care of the loss of funds during the conversion. It is not the best way, but it still advantageous for the end
result. I am currently also converting while on the ACA, but the small conversions are at 0 tax rate(Income under 30,000 including dividends).
When we start Medicare in 2019 and 2020, we will begin larger conversions up to RMDs age.
Retired May 13th(Friday) 2016 at age 61.
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Old 12-14-2018, 05:05 PM   #4
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Thanks for the replies
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