Have I got our tax deferred down low enough?

[Time2]

Let me start with, the income levels I post below are above what we spend, so will probably be gifting to the kids to avoid building our accounts even higher.
For the last 4 years I have been doing Roth Conversions, most it to the top of the 12% bracket and one year to the top of the 22% bracket.
I’m now wondering, at what level do I stop being concerned with how much we have in tax deferred accounts?
I’m 67 my wife is 64 years old. We plan to take SS in January of 2025. As of today, that will be $55,000 a year.
If I COLA adjust SS 3% per year, I expect my 2028 SS to be $64,000,

my first RMD year.

If I grow our taxable account by 7% a year until 2028, and raise the Dividends & Interest up to 2%, I expect $18,000 a year.
So now we have $82,000 of forced income in 2028 the same year my first RMD is due.
I have my Tax deferred pretty well tamed, assuming 7% growth over the next 5 years, my first RMD will be $8,800.
For a total 2028 income of $90,800. With tax bracket creep, I expect this will keep me in the 12% bracket, (if that exists then)
This probably allows at least the standard deduction amount that I can Roth convert from my wife’s account and still stay in the 12% bracket.
I was thinking since my wife is 4 years younger, I could wait to deplete her Tax Deferred accounts now I’m questioning that.

Between now and 2032 I think we can deplete her Tax Deferred account down to $250,000 even with 7% growth per year.
That will add about $10,000 more RMD income. Now looking at $100,800 income in 2032.
I realize tax rates could increase by 2032 and two years of maxing the 22% bracket would get our Tax Deferred down a quite low.

Do I continue maxing out Roth conversions to the top of the 12% bracket, or should I max the 22% bracket because rates could be higher by 2032.
Polish your crystal ball,

Have I got our tax deferred down low enough? By 2032.


EDIT: One thing I neglected was, if I die, my wife will be filling single and really mess things up! I'll try to avoid that.

 

[pb4uski]

I think that the decision comes down to your estimated marginal tax rate on the RMD if you did no further Roth conversions... IOW, the increase in tax caused by the RMD divided by the RMD... compared to the marginal tax rate on the Roth conversion today.

If the marginal tax rate on the Roth conversion today is less or even equal to the estimated marginal tax rate on the RMD then the Roth conversion wins. In fact, if it is just negligibly higher then it still might be worth doing if only for the thing that you added in the edit about the surviving sopoe being in a higher tax bracket.

All of that said, if you are charitably inclined then I would keep some tax-deferred deferred money to do qualified charitable distributions at 0% tax after you are 70-1/2 rather than at the Roth conversion tax rate.

For me, in 2023 we can do about $90k of Roth conversions and pay about 11.4% in tax vs an estimated 17.5% effective rate on my first RMD, so we'll keep Roth converting to the top of the 12% bracket.