Roth Conversions in 24% Bracket??

[RetireBy90]

And keep in mind that you CANNOT access that money in the tIRA until you pay the taxes! It's not all your money. The govt let you defer it but they still get their share eventually. Once it's withdrawn to your taxable account, or converted to a Roth (subject to the 5 yr rule) it becomes all yours to spend. My mindset is to get rid of that tax liability, where it makes mathematical/financial sense.

I have the assets in a spreadsheet and recently started tracking my TIRA assets at 78% of the balance rather than 100% to drive home to me the funds that are mine.

 

[ChrisC]

Every time I read one of these threads I get irritated at myself for not paying attention a decade or more ago.

Well, mitigate that irritation by future conversions, even if you're doing it on top of RMDs. We've been converting since wife and I both retired in 2013, converting well into the end of the 24% bracket -- last year we finished converting my wife's entire traditional pre-tax retirement accounts into her Roth IRA, two years before she would have been scheduled for RMDs. And this year, I'll begin the conversion process for my pre-tax retirement accounts, but I won't be able to convert the entire amount of pre-tax deferred retirement account funds into my Roth IRA before RMDs hit me in 4 years -- and if earnings on those accounts are any decent -- I'll probably just manage sweeping those earnings as Roth conversion amounts, prior to RMDs take hold of me.

So, it's likely I will be making conversions on top of my RMDs, which could place us in the 32% bracket. If your children heirs are fortunate, like mine, to end up in high tax brackets, and if you don't need to access retirement accounts for living expenses, because you have a generous CSRS pension that takes care of all living expenses, I think conversions should be an annual exercise until the pre-tax retirement accounts are completely exhausted.

 

[RunningBum]

Let's be honest with ourselves. Any plan any of us use is suboptimal, unless you have a crystal ball for things like date of death, future tax rates for you, future tax rates for heirs, etc.

I agree. But going to the ACA subsidy cliff, ACA CSR limit, or top of a bracket you are pretty certain you will be at or lower than later in retirement seems like a safe threshold to convert to.

Return on investment is another factor we can't predict. I've seen posts where people complain that they do conversions, but their tIRA grows and they think they don't make any headway. To that I say that making money probably never causes you financial problems, and consider that the tIRA would be even larger if they hadn't done any conversions.

I'm not at all sure if the conversions I've been doing the last 10-12 years will come out perfect, but it's close enough. Almost certainly better than deciding I have enough no matter what, and not doing anything.

 

[CardsFan]

comments below in blue

I agree. But going to the ACA subsidy cliff, ACA CSR limit, or top of a bracket you are pretty certain you will be at or lower than later in retirement seems like a safe threshold to convert to.

Fully agree. that's where you make a difference

Return on investment is another factor we can't predict. I've seen posts where people complain that they do conversions, but their tIRA grows and they think they don't make any headway. To that I say that making money probably never causes you financial problems, and consider that the tIRA would be even larger if they hadn't done any conversions.

Guilty of commenting, but you are right,

I'm not at all sure if the conversions I've been doing the last 10-12 years will come out perfect, but it's close enough. Almost certainly better than deciding I have enough no matter what, and not doing anything.

Quite right. I am sure you did better than us, because you started the conversions earlier

 

[CRLLS]

Every time I read one of these threads I get irritated at myself for not paying attention a decade or more ago.

Me too. Only during that decade I was threading the needle of ACA subsidies and living off of bank balances. I wish I had paid attention earlier when Roth IRA's were created.