I'm converting based on proposed need for the money. I'm converting about 1M over 4 years. Some of my TIRA money was post tax so I can convert at a discount which saves a little. Also stocks are down so I can convert more shares for the same tax hit. I'm living off cash while converting so all of my income and therefore tax bite is from conversion. The upshot is I can convert 1M for about 12 cents on the buck given my situation. The Roth is for self insurance and extraordinary expense not ordinary income. Everybody is going to die from something and it goes Heart, Cancer, Diabetes, Neurodegenerative and those long term can be expensive. Take cancer 1/3 gets some kind of cancer over a life time and if you're the 1, 1/5 dies. That means 4/5 survive and cancer treatment can be expensive. 2018 study shows 92K/yr average cost. Of those survivors 42% went 100% broke in 4 years treating their disease. If there are 2 of you the odds double. At 65 an Alzheimer diagnosis is 1/10 at 85 1/3. If you get it the natural history is 12 years of likely care. If you're a woman age 65 the chance of living to 90 is 30% and 1.5% living to 100 so if you pull the Alzheimer ring at 85 there is a good chance of needing 7-10 years of care. If you put 1M in a Roth at 60 there is a good chance you will have 3-4M at 85 to cover your extraordinary cost and for me at 12 cents on the dollar it's a bargain from a risk management perspective. The government is getting those taxes one way or another whether it's by your plan or by RMD. I have other money for my daily hamburgers, so the Roth covers the extraordinary risk. By making your TIRA smaller you will RMD at a lower rate and can use the cap gain tax advantage to sell appreciated stock or if you die your spouse will pay less tax over the course. If you have a big honkin TIRA once you RMD it's coming out at ordinary progressive rates. Lets say you're living at the top of the 12% bracket and you need an extra $92K to pay off your cancer over 4 years? That's an extra $112K/yr you'll need to withdraw from the TIRA to pay off the cancer AND the extra taxes, and still keep your household together. If you have excess money, to me Roth conversion is a no brainer. Pay me now pay me later the progressive nature of the tax code will clean your clock. Better to pay me now when your better able to control your bracket according to an optimized plan instead of dire straits.
