popntx
Dryer sheet aficionado
I retired in March of this year and need to make some decisions regarding how to best manage taxes for this year as well as for the next 6 years when I will need to start taking RMD's. For these next 6 years I will be well within the 12% tax bracket, but at RMD time I will be in the 22% bracket, so I have time to take advantage of being in the lower bracket. I currently have a sizeable IRA, a taxable account that will should carry me thru until RMD time, and no Roth account. I currently plan for both me and my wife to delay taking SS until age 70.
One option is to do partial Roth conversions to the top of the 12% bracket until RMD time. If I do this over the next 6 years, I figure I can convert about 25% of my current IRA balance, however I will still be in the 22% bracket at RMD time.
Another option is to take advantage of taking some capital gains in my taxable account each year at 0% tax up to the top of the 12% bracket. I have some sizeable gains in my taxable account, specifically in Fidelity Contra Fund, and I'm thinking about moving these dollars to one of the no cost Fidelity Index funds. I think I can fully move all Contra Fund balances at 0% tax over the next 2-3 years and pay no taxes on the gains. After that, I could use the remaining 3-4 years to do Roth conversions. Another advantage to this option is that Contra Fund throws off large "internal" Capital Gains every year that I wouldn't expect to see with an index fund.
I'd appreciate any thought/opinions about which is the best option.
Thanks!
One option is to do partial Roth conversions to the top of the 12% bracket until RMD time. If I do this over the next 6 years, I figure I can convert about 25% of my current IRA balance, however I will still be in the 22% bracket at RMD time.
Another option is to take advantage of taking some capital gains in my taxable account each year at 0% tax up to the top of the 12% bracket. I have some sizeable gains in my taxable account, specifically in Fidelity Contra Fund, and I'm thinking about moving these dollars to one of the no cost Fidelity Index funds. I think I can fully move all Contra Fund balances at 0% tax over the next 2-3 years and pay no taxes on the gains. After that, I could use the remaining 3-4 years to do Roth conversions. Another advantage to this option is that Contra Fund throws off large "internal" Capital Gains every year that I wouldn't expect to see with an index fund.
I'd appreciate any thought/opinions about which is the best option.
Thanks!