Poll: How Big Are Your Annual Roth Conversions?

[Midpack]

By all means don’t publish an amount here - none of our business, just vote anonymously via the poll!

 

[RunningBum]

My max came before the tax rate reductions, so it's not listed here.

 

[SecondCor521]

In 2020 I did just enough to sop up all of my non-refundable credits.

If I had done more, it would have subjected my income to a higher marginal rate than what I project I will face at age 72. Although the nominal bracket was pretty low, I also account for ACA subsidy loss and FAFSA EFC increase.

In 2021, I'll probably convert up to 225% FPL, since there is a significant FAFSA cliff at that point given the new FAFSA simplification law.

In a year or two when my tax returns probably will no longer have a FAFSA impact, I think I will convert a lot more.

 

[Midpack]

My max came before the tax rate reductions, so it's not listed here.

Could you vote in the current bracket that most closely corresponds to your then $ contributions?

 

[SecondCor521]

Could you vote in the current bracket that most closely corresponds to your then $ contributions?

Clarification sought.

If my plan involves converting up to bracket X% for a number of years, then bracket Y% for a number of years, then bracket Z% for the rest of my planning period, how do you want me to vote?

(This ignores the complexity that my conversion plan for a few years is driven by FAFSA and then for a number of years more by 400% FPL (which may change with the new legislation.))

 

[Dash man]

Starting this year it will be up to the top of the 24% or maybe a little less. Last year was an exception and we went into the middle of the 32% bracket, in part to take advantage of moving stocks hit hard during last March’s sell off.

 

[stepford]

I really miss recharacterization. These days I convert to a few percent below the 22% line since I don't know my income exactly until after the new year, don't want to go over and can no longer recharacterize. I could probably make a better effort at income estimation and get closer, but so far it hasn't been worth the trouble.

 

[Midpack]

Clarification sought.

If my plan involves converting up to bracket X% for a number of years, then bracket Y% for a number of years, then bracket Z% for the rest of my planning period, how do you want me to vote?

Does “maximum” in the poll question not cover that?

 

[geeky_grrl]

I'm not currently doing any Roth conversions. I have a lot of after tax megacorp stock still and I'm slowly diversifying out of it and using all of my lower tax brackets on those capital gains. I'll reevaluate in a few years once I've gotten rid of the megacorp stock. I already have less traditional 401k than Roth IRAs or after tax accounts and I'm not sure how bad the RMD tax pain will be vs. my current tax pain.

 

[SecondCor521]

Does “maximum” in the poll question not cover that?

I guess so. I'll vote the maximum bracket I intend to use. But that's only for the last four years of my 35 year plan from ages 82 to 85, so take my data point with a grain of salt.

 

[Dtail]

Not converting for me, as am taking some tIRA to manage MAGI for ACA.
For DGF, I am converting up to the 12% bracket, as my analysis doesn't put her above that bracket, as she is already taking SS.
If we get married down the road, 12% will probably still be the bracket.

 

[meekie]

Doing up to the 24% bracket since that'll be a discount still if the pre-TCJA tax brackets come back. I'm pretty unbalanced when it comes to Roth accounts, and I'd like to get a good chunk moved over. I'm also still working some, so can't get low enough for ACA subsidies, so I figured I might as well move it now, then hopefully do subsidies later.

 

[RetireBy90]

I’m doing higher conversions till 2026 or till new tax rates come to play. This year May add some extra if taxes go up for 2022 and beyond. Somewhere around 2030 if man is still alive i plan to use remaining TIRA for QCDs.

 

[SevenUp]

Up "to" or up "through"?

 

[gcgang]

https://www.tax-brackets.org/federaltaxtable/2022

I had to look it up.

Wanted to convert up to $172,500 (24% - Joint), but probably spilled a few dollars into 32%.

 

[RetireBy90]

I voted for my bracket converting in. After I read the question again I may have selected a bracket one lower.

 

[Happyras]

I am betting that tax brackets will be higher when I am 72, and worse, if either of us are single, it will be maxed. It is hard for us to stay below 32% bracket, but I got to believe it will be more like 39% after 2026. So many gotcha's come into play with cap gains rates and NIIT once you get above a certain total income. It is a best guess that it will just be worse if they make 400K the new break point to rob us of our long earned profits from years of work on our small business.

 

[Gumby]

This year, I intend to convert enough to get just below $100k AGI, in order to preserve certain state tax breaks. Starting next year, I will convert up to the first IRMAA limit (currently $176k AGI) which will actually put me $21k below the top of the 22% bracket ($172k taxable income), given the standard deduction of $25k. As I see it, if I trigger IRMAA, the surcharge for 2 people will be $1596, which is 7.6% of that last $21k, for an actual marginal rate of 29.6%

 

[Nature Lover]

Couldn't reply since I'm not doing roth conversions. My available IRA balances eligible for conversion are such that the RMDs/balances are expected to be used for 1) QCDs, or 2) Health related expenses. The total is relatively small (only <10% of my total portfolio) and I have no bequest needs ---so no need to pay taxes at this point (and maybe not ever).

 

[Midpack]

I am betting that tax brackets will be higher when I am 72, and worse, if either of us are single, it will be maxed. It is hard for us to stay below 32% bracket, but I got to believe it will be more like 39% after 2026. So many gotcha's come into play with cap gains rates and NIIT once you get above a certain total income. It is a best guess that it will just be worse if they make 400K the new break point to rob us of our long earned profits from years of work on our small business.

Me too. If taxes rates don’t change I’ll save on taxes and break even on portfolio residual on the sizable conversions I’m doing. But I don’t believe for a minute that taxes won’t become more punitive over the next 30 years, just a matter of when and how much IMO. So I should make out on taxes AND ending portfolio value.

 

[rk911]

waited too long. now it makes no sense to do them.

 

[bada bing]

Up to somewhere in the current 24% bracket - filing single. Probably fill the 24% bracket all the way up for the next few years in anticipation of higher rates to come. Also I may eventually end up as a resident of an income tax state from my no state income tax situation now.

 

[USGrant1962]

Aren't the first two categories the same thing?

 

[pb4uski]

I have no idea how to interpret the poll.

I generally convert to the top of the 12% bracket (formerly 15% bracket)... but my other income varies quite a bit. From 2013-2019, we converted between $25-74k a year... average was $56k each year. In 2012 and 2020 I didn't do Roth conversions and did 0% LTCG instead.

Our federal tax on the conversion was 2.0% to 10.6% with an average of 8.5%. Absent a conversion in any of those years our federal tax would have been $0, so the rates above are a blend of 0% (offset by itemized deductions), 10% and 12% (previously 12% and 15%).

 

[Niuatoputapu]

Starting next year, I will convert up to the first IRMAA limit (currently $176k AGI) which will actually put me $21k below the top of the 22% bracket ($172k taxable income), given the standard deduction of $25k. As I see it, if I trigger IRMAA, the surcharge for 2 people will be $1596, which is 7.6% of that last $21k, for an actual marginal rate of 29.6%

+1

Our plan is to convert to just short of the first IRMAA threshold (2019 MFJ AGI of $176,000) for the next 16 years (to age 80) with a backup plan for the surviving spouse to convert to just short of 4th IRMAA threshold for single filers (2019 SF AGI of $165,000). Sure hope we don't use the backup plan.

The plan puts us in the 22% MFJ marginal bracket, and the backup plan the Single 24% bracket.

But as Gumby suggests we do not use a tax bracket as a guide, but a combo of income tax and Medicare premiums. So I decided not to vote in the poll.