There really is no downside to doing conversions to near the top of whatever bracket range you expect to be in, as long as you don’t expect to move from an income tax state to a non income tax state, especially if you are MFJ & have decent pensions and high SS that eliminates any QDIV or ACA benefit, or no SS tax, starting you already near or in to the current 22%.
It’s just psychological having to pay sooner rather than later on money that is already really the Feds. It’s not like you are depriving yourself of money you can use. You can only use so much, and then have to pay even more on it, if you want to, vs pulling it from a Roth.
And as others have said already, many will find that all you ended up doing is enlarging the Roth greatly while only minimizing growth in the tIRA. I can convert 100k this year and that about brings my tIRA to where it was at the beginning of the year!
I’m 63 now, and even if I only convert $500k by the time I claim SS, when RMDs hit at 72, it will still generate way more than taxable income than I can use, so it goes back to rebuilding the “depleted” after tax accounts, just less than if I did no conversions. And none of this takes in to account the huge benefit if you find yourself FS FIT. My VERY wealthy neighbor lost his wife this year. We were discussing taxes and he told me that as much as his wife used to spend on “stuff” (like she bought a mountain condo with her money, they kept their finances separate, for $350k, and spent $150k renovating and decorating it, and never set foot in to it once it was done before she passed, ), it was still cheaper than what he will end up paying increased FIT, for 2022, now that he is single, since what she bought had SOME values, even as a depreciating asset!
It’s just psychological having to pay sooner rather than later on money that is already really the Feds. It’s not like you are depriving yourself of money you can use. You can only use so much, and then have to pay even more on it, if you want to, vs pulling it from a Roth.
And as others have said already, many will find that all you ended up doing is enlarging the Roth greatly while only minimizing growth in the tIRA. I can convert 100k this year and that about brings my tIRA to where it was at the beginning of the year!
I’m 63 now, and even if I only convert $500k by the time I claim SS, when RMDs hit at 72, it will still generate way more than taxable income than I can use, so it goes back to rebuilding the “depleted” after tax accounts, just less than if I did no conversions. And none of this takes in to account the huge benefit if you find yourself FS FIT. My VERY wealthy neighbor lost his wife this year. We were discussing taxes and he told me that as much as his wife used to spend on “stuff” (like she bought a mountain condo with her money, they kept their finances separate, for $350k, and spent $150k renovating and decorating it, and never set foot in to it once it was done before she passed, ), it was still cheaper than what he will end up paying increased FIT, for 2022, now that he is single, since what she bought had SOME values, even as a depreciating asset!
