Currently I have no Roth and will probably have in excess of 3M RMD from tIRA exposure when I turn 73 in 6 years.
All IRA and 401K are in SPY-like equities now. tIRA is about 2M, 401K is about 800K and 401K is not part of this discussion. tIRA and 401K is about 20% of investable assets (currently).
I am in a high W2 bracket now until Sept 30 2025.
If and only if I do a backdoor Roth conversion I prefer it be done all at once (from 2M tIRA). I'm not concerned about the taxes, I will eat that and have accepted it.
My plan is contingent on the timing of the next market correction (20% or more). I have no doubts that this is possible before RMD kicks in in 6 years. I'm just thinking in terms of contingencies now, as I want to be ready in the event of a market correction, whatever and whenever that may be.
Questions:
My thinking is this. First, I want a contingency for the next market correction. Second, I want to maximize my Roth shelter leverage if this happens and am willing to pay a premium for that. Third, I am a firm believer that significant market corrections are buying opportunities assuming no wars, country remains a democracy, Fed intervention is palpable, etc. That said, I'm willing to write those big checks if necessary. I believe the S&P will return 10% give or take over long periods of time. Lastly, I want this pain to happen only once and during the most painful period possible (a market correction). We have much more than we could ever spend in a lifetime and I'm willing to take a big hit if the opportunity presents itself. I am a firm believer of buying low and selling high. If a market correction happens, what better way would I be reducing my tax exposure and reducing RMD all at once?
Any flaws in this thinking? I know it is not optimal but it is less than 15% of investable assets and I feel like I would be getting a discount on the taxes.
All IRA and 401K are in SPY-like equities now. tIRA is about 2M, 401K is about 800K and 401K is not part of this discussion. tIRA and 401K is about 20% of investable assets (currently).
I am in a high W2 bracket now until Sept 30 2025.
If and only if I do a backdoor Roth conversion I prefer it be done all at once (from 2M tIRA). I'm not concerned about the taxes, I will eat that and have accepted it.
My plan is contingent on the timing of the next market correction (20% or more). I have no doubts that this is possible before RMD kicks in in 6 years. I'm just thinking in terms of contingencies now, as I want to be ready in the event of a market correction, whatever and whenever that may be.
Questions:
- Is it possible to backdoor convert the entire 2M (whatever it is worth after correction) tIRA at once?
- Marginal taxes will probably be 37Fed + 12.3Cal, almost 50 percent, ouch!
- Funds would immediately go back into SPY for the long term and are not needed for living expenses
- Can I move the entire principal into Roth and pay taxes from other funds (thus protecting the entire amount under Roth)?
My thinking is this. First, I want a contingency for the next market correction. Second, I want to maximize my Roth shelter leverage if this happens and am willing to pay a premium for that. Third, I am a firm believer that significant market corrections are buying opportunities assuming no wars, country remains a democracy, Fed intervention is palpable, etc. That said, I'm willing to write those big checks if necessary. I believe the S&P will return 10% give or take over long periods of time. Lastly, I want this pain to happen only once and during the most painful period possible (a market correction). We have much more than we could ever spend in a lifetime and I'm willing to take a big hit if the opportunity presents itself. I am a firm believer of buying low and selling high. If a market correction happens, what better way would I be reducing my tax exposure and reducing RMD all at once?
Any flaws in this thinking? I know it is not optimal but it is less than 15% of investable assets and I feel like I would be getting a discount on the taxes.