Up to what bracket should I do Roth Conversions

[audreyh1]

Are those figures gross income or taxable income?

The AGI. So certain credits get taken off first.

 

[MarieIG]

I have bought stocks that went bankrupt in the past. We have had a few threads on this a while back.

And about funds, you can lose plenty of money with funds, and I have done that too. Nowaways, people do it with ARK funds.

Compared to meme stocks and hot-shot funds, option trading on something like Walmart, Costco, Pfizer is so tame. The reward is modest, and the risk is correspondingly small.

People are just prejudiced when they hear the term "option", and don't know the in/out of it.

Well you caught me. I bought one share of ARK genomic (I wanted to watch it for its holdings.) Yes, I did notice that you limit potential losses. And you're right, I don't know the ins and outs . . . Maybe someday. I like Pfizer, Costco and Walmart although Walmart has very rudely refused to drop to my target price.

 

[MarieIG]

I'm done for the year.

 

[aja8888]

I'm done for the year.

Did you pick up any AAPL?

 

[MarieIG]

Did you pick up any AAPL?

Noooooooooo but -

There's always next year

 

[aja8888]

Noooooooooo but -

There's always next year

 

[explanade]

The IRMAA increases do bother me. So do the higher 2026 tax brackets that we are currently headed for (Will Congress will make the current ones permanent? I doubt it.) So, who knows? Save some IRMAA costs now and pay more taxes later? Or boost IRMAA in 2024 and but pay higher taxes in 2026?

It would be nice not to be under the threat of IRMAA and RMD.

IRMAA is based on income tax rates?

According to this site, for 2022, here are the IRMAA fees:

For 2022, Medicare Part B IRMAA with premiums included are $170.10 for the lowest income bracket, $238.10, $340.20, $442.20, $544.30, and $578.30 per month as you go into higher income brackets.

For Medicare Part D, IRMAA is $0, $12.40, $32.10, $51.70, $71.30, and $77.90 per month.

The IRMAA-eligible income brackets start at $91,001- $114,000 for single filers and $182,001 to $228,000 for joint filers. They top off at more than $500,000 and $750,000 for single and joint filers respectively.

https://www.verywellhealth.com/how-the-ahca-cuts-medicare-taxes-for-the-wealthy-4141437

So the most one would pay for Part B would be just under $7k for a year?

And the most for Part D would be about $935.

Those are big bites but those maximums are people with retirement incomes of several hundred thousand?

 

[explanade]

Regarding keeping MAGI low to get ACA subsidies, does that also apply for the ACA premium assistance that they passed in the last year or two as well?

I guess you don't get as much assistance the higher income you report?

OK, looked it up, the American Rescue Plan eliminates the subsidy cliff until 2025.

So converting to Roth or withdrawing from 401k or tIRA will cost you more in ACA premiums until 2025. Little or no subsidy at $150k MAGI.

 

[audreyh1]

IRMAA is based on income tax rates?

According to this site, for 2022, here are the IRMAA fees:



https://www.verywellhealth.com/how-the-ahca-cuts-medicare-taxes-for-the-wealthy-4141437

So the most one would pay for Part B would be just under $7k for a year?

And the most for Part D would be about $935.

Those are big bites but those maximums are people with retirement incomes of several hundred thousand?

IRMAA is based on your AGI (not on income tax rates) plus tax-exempt interest = MAGI. It’s before deductions and other things that reduce your taxes and capital gains versus ordinary income rates, etc..

For MFJ on 2023 you start paying IRMAA at MAGI ahove $194,000. There are several tiers. These are indexed to inflation except for the top tier.

 

[Rianne]

Looking ahead to 2023, it's my understanding we can wait until April 2024 to do a 2023 conversion. That way we'll have a better understanding of our first year of MFJ retirement income and how much to convert. Does that sound reasonable? Then we won't have to mess with mid-year coupon tax payments and can pay all at once in April.

 

[MarieIG]

Looking ahead to 2023, it's my understanding we can wait until April 2024 to do a 2023 conversion. That way we'll have a better understanding of our first year of MFJ retirement income and how much to convert. Does that sound reasonable? Then we won't have to mess with mid-year coupon tax payments and can pay all at once in April.

https://www.napa-net.org/news-info/...on is taxable,a regular Roth IRA contribution.

Not sure if I am understanding correctly. Aren't the conversion deadlines different from contribution deadlines?

 

[MarieIG]

Well, time to start my plan for next year.

My NW will be down, but due higher interest rates, my "income" will be up, which will leave less room for conversions.

I would like to do some "dollar cost averaging" in kind conversions, and perhaps a bit more buying on the dips (which I know, I know would make me a dirty market timer).

 

[Rianne]

https://www.napa-net.org/news-info/...on is taxable,a regular Roth IRA contribution.

Not sure if I am understanding correctly. Aren't the conversion deadlines different from contribution deadlines?

Yikes! We totally misunderstood our accountant then. Thanks for posting the NAPA article. We would have happily gone through 2023 thinking we can wait until next year.

 

[MarieIG]

Yikes! We totally misunderstood our accountant then. Thanks for posting the NAPA article. We would have happily gone through 2023 thinking we can wait until next year.

Glad to have seen your post. I just learned the difference in conversion/ contribution deadlines myself this year.