Staggered retirement and RMDs?

[albireo13]

Hi,
I am 62yo and my DW is 58. I plan to retire in 2020 and my DW likely will work another 3+ years. This means I will be 68 when our work income goes to 0.


I originally planned to start Roth conversions after I retire but, am thinking with her good income (>$120K/yr) I wouldn't get much tax benefit until she retires. Then, I'd only have 2 yrs conversions until RMDs kick in. Maybe just sitting tight and dealing with RMDs isn't so bad.
OF course my wife could start Roth conversions once she retires.


Thoughts?

 

[RunningBum]

Whether and how much to do Roth conversions has to do with early retirement tax rate vs. anticipated tax rate when RMDs happen, when you take SS, how RMD income affects SS taxability, what happens if one of you passes, possible ACA subsidies, and probably a few other factors. Address those things and you'll get more meaningful advice.

 

[VanWinkle]

Hi,
I am 62yo and my DW is 58. I plan to retire in 2020 and my DW likely will work another 3+ years. This means I will be 68 when our work income goes to 0.


I originally planned to start Roth conversions after I retire but, am thinking with her good income (>$120K/yr) I wouldn't get much tax benefit until she retires. Then, I'd only have 2 yrs conversions until RMDs kick in. Maybe just sitting tight and dealing with RMDs isn't so bad.
OF course my wife could start Roth conversions once she retires.


Thoughts?

There is no reason to do the conversions unless the difference in tax rates makes it a win. With the current rates good til 2025, there may be an advantage to doing 2-3 conversions after she retires.

 

[cathy63]

You might want to investigate switching your filing status to Married Filing Separately. You live in a non-community property state, so she'd be paying the same as a single person with a $120K income, and you'd have $0 earned income which would let you do some Roth conversions at low rates.

You will pay more tax this way than if you file jointly, but I think it's worth playing with some tax calculators to see how big the effect is.