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Old 09-15-2021, 08:18 AM   #81
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Ideally I like to be balanced between IRA, Roth, and taxable accounts.
This would be especially useful if you have years with large expenses (buying a new house, new car, etc), then you can lower your taxes on the peak years by taking more from Roth/taxable instead of IRA.
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Old 09-15-2021, 09:17 AM   #82
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Originally Posted by teejayevans View Post
Ideally I like to be balanced between IRA, Roth, and taxable accounts.
This would be especially useful if you have years with large expenses (buying a new house, new car, etc), then you can lower your taxes on the peak years by taking more from Roth/taxable instead of IRA.


+1. It is nice to be able to choose how much to pay in taxes. Right now we are 52% Roth and 48% traditional. But we’ll be roughly 40:60 by retirement age if I keep maxing out the 401(k).
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Old 09-15-2021, 09:24 AM   #83
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+1. It is nice to be able to choose how much to pay in taxes. Right now we are 52% Roth and 48% traditional. But we’ll be roughly 40:60 by retirement age if I keep maxing out the 401(k).

I’m at about the same ratio and have been using the Roth for self-imposed RMDs. That’s been easy with recent market returns (exception: 2018). I have some years to go before the IRS starts the actual RMDs from tax-deferred IRA and 457.
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Old 09-15-2021, 09:50 AM   #84
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Th one thing I wasnt looking at before is if I have an ROI of greater than 4% on investments, the RMDs will drive me from the 22% to 24% maybe future 28% tax bracket in 2026. I maybe look at using cash along with my pension to be in the 12% bracket for two years and make some conversions

I was modeling before for a conservative low ROI of 2.5% to make sure the money would last

So maybe some conversion while in the lower bracket and invest all that in stocks since I wont be touching the ROTH for a long time so it can be growth focused and then more conservative distro in the remaining IRA as that is what I ill be using for the near term future. I am going to look at doing enough conversions to keep the RMDs from driving me to the higher tax bracket with an 8% return on my IRA. That should bound me until tax laws change again

The point of my post is to consider RMDs but also the impact of RMDs over Reasonable returns in looking at Tax benefits to conversions
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Old 09-15-2021, 09:54 AM   #85
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There are a couple of IRA>ROTH conversion calcs online that will determine if it is worth it or not. Found that it was a toss up for me, and didn't want to hassle with it after that.
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Care to provide a couple links to the online calculators that you used?
Don't know which gooddog used, but the two spreadsheets mentioned in Roth IRA conversion - Bogleheads can each be useful. The first for a multi-year look with decent tax estimation, and the second for a single year look with very accurate federal (and reasonably accurate state) tax estimation.
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Old 09-15-2021, 10:20 AM   #86
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Originally Posted by teejayevans View Post
Ideally I like to be balanced between IRA, Roth, and taxable accounts.
This would be especially useful if you have years with large expenses (buying a new house, new car, etc), then you can lower your taxes on the peak years by taking more from Roth/taxable instead of IRA.
I see no need for balance...I already plan to convert my modest traditional IRAs into my Roth IRA account well before I'm eligible to take SS.

And I'd happily move my entire taxable account into my Roth account were there a reasonably priced mechanism to do so.
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Old 09-15-2021, 10:45 PM   #87
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Looked into Roth conversion a couple years ago. Based on our situation, it didn't seem to worth the trouble. Might look into it again some day.
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Other than showing that conversions aren't for everyone, which I don't think is in dispute, this really doesn't help anyone. A short description of your situation and why there apparently is little or no gain would be helpful. Are you still working? Already taking SS and RMDs? Is your income bracket as high as you expect it to be when RMDs start? And what is the "trouble" you see with doing conversions?
Sorry no time to write too much details.

To your questions: We retired about 6 years ago at our early 50s. So too young for SS or RMD. Our tax bracket is high now so doing Roth conversion doesn't seem worth it. The "trouble" is doing more work.
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Old 09-16-2021, 01:31 AM   #88
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Do you expect your taxes to be even higher when you are on SS? When one of you pass away you’ll also be forced into filing as single which would mean an even higher tax bracket.
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Old 09-16-2021, 10:43 AM   #89
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I see no need for balance...I already plan to convert my modest traditional IRAs into my Roth IRA account well before I'm eligible to take SS.

And I'd happily move my entire taxable account into my Roth account were there a reasonably priced mechanism to do so.
First world problems. My annual expenses are well below the top of the 12% so I can transfer from IRA (25%) to Roth (12%). With the expected COLA raise, tax brackets will go up as well as the standard the deduction. As long as my expenses don't increase (LBYM), more $$ to the Roth.
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Old 09-16-2021, 11:46 AM   #90
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I see no need for balance...I already plan to convert my modest traditional IRAs into my Roth IRA account well before I'm eligible to take SS.

And I'd happily move my entire taxable account into my Roth account were there a reasonably priced mechanism to do so.
Same here. I've been converting about 25K per year for the last few years to stay in the 12% tax bracket. Come January I plan to convert the remaining 25-30K or so and no longer have my traditional IRA.

I wish I could get my taxable savings into my Roth, but we already max out the $7000 per year contribution limit for each of us. Once we retire in a couple years we'll have no earned income and won't qualify for more Roth contributions. We'll just spend whatever is left in taxable until it's gone.
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Old 09-16-2021, 12:13 PM   #91
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I see no need for balance...I already plan to convert my modest traditional IRAs into my Roth IRA account well before I'm eligible to take SS.
In my case almost all my money is in an IRA, so converting any significant amount would be taxing. So I convert what I can while staying out of the higher tax brackets. Hence, my goal to attempt to be better balanced.
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