Roth Conversions for 4 years?

[meleana]

Well out of my checking, of course, but the conversion tax is a lot more than $1000 and I pretty much ignore my Roth accounts because I don’t need to use them, but not my checking account.

It’s all psychological, I know.

 

[pb4uski]

Yes. I thought that also, but have been leaning towards just taking it out if the converted account as you have done, despite conventional wisdom.

I guess another part of this is I like simplicity. A lot!

And I don’t like the idea of starting to have to pay estimated taxes to the IRS in the second conversion year and probably would just wait and pay them at the end of each year and pay the penalty whatever it is. So there’s that also.

Most of our income is Roth conversions, but I do have a small pension. What I do is calculate our taxes for the year, divided that number by 12 and then set my pension federal withholding taxes to be equal to that amount.

I normally do about 90% of my Roth conversion in January and then top it up in December... so the taxes on the Roth conversion are paid in arrears because I hve them paid as withholding from pension. If I did estimated payments I would need to pay the federal tax on my Roth conversion in April rather than over the year.

 

[meleana]

Most of our income is Roth conversions, but I do have a small pension. What I do is calculate our taxes for the year, divided that number by 12 and then set my pension federal withholding taxes to be equal to that amount.

I normally do about 90% of my Roth conversion in January and then top it up in December... so the taxes on the Roth conversion are paid in arrears because I hve them paid as withholding from pension. If I did estimated payments I would need to pay the federal tax on my Roth conversion in April rather than over the year.

We have no income except some interest and dividends, etc. No pensions to take taxes out if. The Roth conversion would be our biggest income.

 

[meleana]

Well, I made an appt with our FA for this Monday to discuss this yet one more time. With the market being so bad, and this insane inflation and winter coming, I am really still hesitant to take cash out of my savings account and give it to the government. And if I have the taxes withheld from the converted account that would be selling stock funds at a big loss.

Third option I thought of for this year is to just withdraw some of the bond fund money we have in traditional IRAs up to our 12% tax bracket (therefore lowering the balance in there for when RMD’s start) and taking the money and putting that in cash, I bonds, CD’s etc., also. But the bond funds are also down! So much for diversification!

Fourth option is do nothing. ��