trapperjohn
Recycles dryer sheets
- Joined
- Jun 1, 2012
- Messages
- 87
Several times, on this forum, I've heard people say that they plan to convert their tIRA over to a Roth. I know that there have been recent threads about the wisdom of converting vs not converting. That's not my question.
Rather, my question is related to the amount to convert each year until the total tIRA is converted
Usually, when people post that they plan to convert, they say that they will convert only enough to get them to the top of their current tax bracket for the tax year.
Why do you limit it to your current tax bracket? Why not just convert as much as legally possible in one transaction, perhaps after reserving some amount to pay the required taxes?
Here is the reason behind my question: I've created a spreadsheet to show me my total tax cost if I convert each year only up to the 15%, 25%, and 28% tax brackets. It also shows my account balances at age 90. I will always pay the lowest total tax, and have the highest ending Roth balance, if I converted enough each year up to the top of the 28% bracket.
If I convert only up to the 15% bracket, I would never deplete my tIRA. If I convert an amount each year to get me to the top of the 25% bracket, I pay more total tax and have a lower Roth balance at age 90.
Is there a flaw in my thinking that I don't see?
Rather, my question is related to the amount to convert each year until the total tIRA is converted
Usually, when people post that they plan to convert, they say that they will convert only enough to get them to the top of their current tax bracket for the tax year.
Why do you limit it to your current tax bracket? Why not just convert as much as legally possible in one transaction, perhaps after reserving some amount to pay the required taxes?
Here is the reason behind my question: I've created a spreadsheet to show me my total tax cost if I convert each year only up to the 15%, 25%, and 28% tax brackets. It also shows my account balances at age 90. I will always pay the lowest total tax, and have the highest ending Roth balance, if I converted enough each year up to the top of the 28% bracket.
If I convert only up to the 15% bracket, I would never deplete my tIRA. If I convert an amount each year to get me to the top of the 25% bracket, I pay more total tax and have a lower Roth balance at age 90.
Is there a flaw in my thinking that I don't see?