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Old 12-19-2007, 07:35 PM   #21
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I'm not sure if it was mentioned, but I'd definitely convert if in a 15% or under tax bracket. Above that I'm not so sure.
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Old 12-19-2007, 07:38 PM   #22
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There are online calculators in which you put in your info, and it tells you what you'd end up with for Conversion vs. Not.

Also, consider whether there will be some point at which you are in a low tax bracket. For example, you are living off taxable savings, as I'm doing now. If so, you can do your converting then.
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Old 12-20-2007, 04:00 AM   #23
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you have to figure anytime our gov't gives us something you know the odds arent in your favor. they would love nothing more than to give us all the opportunity to convert to roths or put our money in roth 401ks or roth ira,s. they know statistically most of america will be in lower tax brackets when they retire. even if you stay the same they are loosing 3% a year in your tax money as your bracket increases. allowing more income in the 0-10% bracket. remember marginaly your brkt may hit 25% but most of your income may be at a nominal rate of 15% . ill hold on to all my 401k money and ira money and let the full amount compound vs saying goodbye to a 1/3 converting thank you paying taxes on money i may never owe taxes on.

for someone who may be at the beginning of their working life and in the 10%-15 % bracket roths make sense if they see their income as at the low of their career . at a deductable 10% or 15% it may not pay to take the write off now and the roth makes better sense

like i said my plan will be to spend my iras first dwindling them down thru the early years so the mandatory distributions are lower. even a 72t election would probley work out way better than a roth for most of america .
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Old 12-20-2007, 10:02 AM   #24
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During our working life my wife and I both funded our retirement plan options to the max. When I ER'd the 401k and company deferred retirement money was rolled over to an IRA. Now we have much more money in IRA's and Roth's then taxable savings. This gives us a nice low tax profile. We can make changes to our investment accounts without worrying about taxable gains until withdrawal.

I've converted the max amount to Roth's each year. Probably won't start taking SS for another 6 years. This coming year I won't convert to Roth's since in 2008-2010 the cap gain rate is zero up to the top of the 15% bracket (see this ).

I think this will work out over the next 10 years which is what counts for me. Who knows what may happen in the next 20 to 30 years though as far as tax law is concerned.
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Old 12-20-2007, 08:09 PM   #25
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I wrote a reply but now am changing it completely. As BigBob mentioned, the household income has to be $100,000 or less, so I'm not qualified, at least not this year. Will wait till I'm unemployed again or till one of those exempt years. Thanks!
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Roth does allow a larger deferral
Old 12-21-2007, 06:15 PM   #26
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Roth does allow a larger deferral

but a simple reduction in tax rate from a 25% marginal to a 20% gross from accumulation to decumulation would be enough to wipe out that advantage. It really seems the determinant is whether you are planning on a constant level income or wealthier retirement (which bracket you will be in). Most of us probably plan for the latter and would benefit from a conversion, but others may not.
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