Koolau
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I screwed up my tax planning for the year and wondered if the group could help me make up my mind about an unplanned Roth conversion yet this year. I have never done my own taxes and know surprisingly little about the nuances. My bad!
At the beginning of the year, I decided NOT to convert my last Trad. IRA (about $60K now). Based on previous years spending/income, I thought it would cost too much in taxes. BUT, my taxable income will be lower than I planned by about $60K (+/- $20K). So why not convert?
1. Converting has all the usual benefits (and downsides) of Roth conversion - I'm okay with paying the taxes with after tax money.
2. Converting this year would mean I would have ONLY my 401(k) remaining to apply RMDs to next year. (DW has converted ALL IRAs to Roths). (As Forest Gump would say "One less thing.")
3. Breaking into the 25% bracket is a given for the rest of my life, so...
Here is the issue: If I have not paid enough quarterly taxes to cover the conversion, what kind of penalties might I expect? Are they a "nuisance" (a couple of hundred dollars) or draconian (a thousand or more.) Can't find a good source and I know you folks will have an idea.
Thanks for any advice you can offer.
At the beginning of the year, I decided NOT to convert my last Trad. IRA (about $60K now). Based on previous years spending/income, I thought it would cost too much in taxes. BUT, my taxable income will be lower than I planned by about $60K (+/- $20K). So why not convert?
1. Converting has all the usual benefits (and downsides) of Roth conversion - I'm okay with paying the taxes with after tax money.
2. Converting this year would mean I would have ONLY my 401(k) remaining to apply RMDs to next year. (DW has converted ALL IRAs to Roths). (As Forest Gump would say "One less thing.")
3. Breaking into the 25% bracket is a given for the rest of my life, so...
Here is the issue: If I have not paid enough quarterly taxes to cover the conversion, what kind of penalties might I expect? Are they a "nuisance" (a couple of hundred dollars) or draconian (a thousand or more.) Can't find a good source and I know you folks will have an idea.
Thanks for any advice you can offer.