[FONT="]
+1 re probably seeking professional help.
Don't get discouraged. You can do it as well as they can.
Find good tax software and try several scenarios. Good tax software should be able to warn you about the AMT.
All we can do is assume that future tax rules will be the same as today. Of course, they will not, but we are only looking for differences between alternatives to give us a strategy.
I have been assuming a simple return of 6% for everything, an estimated 3% inflation rate, a SS annual increase of 2% and no outside income. An estimated first year income after taxes comes from FIREcalc and is increased 3% a year. I take no account of the value of the house (we would get a one-time Mulligan on capital gains--two, one for each of us, if we downsize and sell twice and we both live that long). Also both of us life to 100. More on assumptions later.
I use a fairly simple spreadsheet to keep track of the cases year by year. It includes a column for tIRA balance, tIRA withdrawals, SS income (from our annual SS reports), total income from the last two, taxes to be paid on that, after-tax income, how much of after-tax income is moved to the Roth and Roth balance. On a second page, I look at each year, with columns for SS, income from tIRA (100% taxable), and the income tax calculated for the total income. (Deductions are assumed to be the same in all cases.) The amount of tIRA withdrawn is incremented in successive rows in even steps. The income tax for each case is calculated using the tax prep software. The last column calculates the marginal % tax rate between steps. This column tells me when to stop withdrawing from my tIRA each year. That info goes back to the first page (manually). On the first page again, when the tIRA is exhausted, the deficit in the inflation-adjusted after-tax income is made up by withdrawing from the Roth. I sum all the income taxes paid to age 100. I then look at the balances of the tIRA and Roth at 100 years.
The calculations are tedious because there is a bit of manual work, but the tax software does the heavy lifting.
The simple answer is that the payoff for converting tIRA to Roth is big, especially if it can be done before RMDs start at 70.5. I looked at withdrawals from the tIRA to the top of the 0%, 15% and 25% tax brackets. I am still checking my calcs, but it looks like the more I convert and the earlier I convert, the better.
What happens in the first 10 years makes a big difference. There are several cases where we lose to inflation (can't maintain 3% increase in after-tax income until 100) and where we run out of money in the tIRA and Roth accounts well before 100. Typically, this warns me that we are starting with too high a draw.
The simplifying assumptions work well enough to give us a strategy. Remember, we are only looking for DIFFERENCES between methods. The things that don't change don't matter. Of course, we will do the taxes every year with the current rules. The assumptions are conservative. If we make more money, we pay more taxes. No problem.
The big attraction for me is that potentially we could have zero taxable income and be freed from making quarterly payments or even filing.
We could be protected from many possible future tax increases and rules. Of course, they could always tax Roths, but I suspect that other things would happen first.
Again, do not be discouraged. It is not as hard as you may think.
[/FONT]
