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Roth conversion question
Old 03-15-2008, 04:57 PM   #1
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Roth conversion question

I plan to eventually convert some IRA funds to a Roth over 5-10 years. I intend to pay the income taxes from a non-IRA source. The question is: Should this tax bite be treated just like any other budgeted retirement expense that must be supported by my SWR?

It seems a little harsh to do this since it should lower my tax expenses in the future. I guess it can be modeled as a step down in spending after a certain year. How do others treat this issue in FireCalc?
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Old 03-15-2008, 09:24 PM   #2
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Quote:
Originally Posted by Three-D View Post
I plan to eventually convert some IRA funds to a Roth over 5-10 years. I intend to pay the income taxes from a non-IRA source. The question is: Should this tax bite be treated just like any other budgeted retirement expense that must be supported by my SWR?

It seems a little harsh to do this since it should lower my tax expenses in the future. I guess it can be modeled as a step down in spending after a certain year. How do others treat this issue in FireCalc?
My view is that the tax bite should be supported by your SWR. You are are gambling that it will lower your tax expenses in future years. No matter how confident you are, I would still treat it as an investment which may or may not succeed.

I don't include in FireCalc since not converting IRA's (in FireCalc) gives me a more conservative number.

For the record I do intend to convert IRA's to Roth's.
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