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Old 06-27-2021, 07:58 AM   #141
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I still think this is a solvable problem, but with lots of variables that have a range. So, in the end you would have many answers. We would be comparing No RoCo to all Roth Conversions were in the 12% bracket and later tax bracket is 12%. Or RC paid at 12%, later moved to 22% tax bracket, etc. An option for tax rates rise, it would get very complicated, but also the top dollar of tax bracket rise. Other income besides RMDs would need to be added.

I'm not sure you need to model a surviving spouses jump in taxes against RoCo or no RoCo, I think that's a no brainer.
I'd like to see whether it is wise to Delay SS of spouse with lower income to do more RoCos, versus taking SS and doing less RoCo.
I have wondered if I could go to the local community college and have some students take on such a Excel or Google sheets program. If it was possible, Programmers would need a bunch of info on the variables to be included.


Moderators,

If RoCo seems like good shorthand for Roth Conversions, can it be added to the list at
Standard Acronyms You May Find on the Forum
under
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Old 06-27-2021, 11:22 AM   #142
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I'm not sure you need to model a surviving spouses jump in taxes against RoCo or no RoCo, I think that's a no brainer.
But what does that being a "no brainer" mean? Do you always convert more because of that? Unless you find an expiration date on yourself, you don't know how long you'll be MFJ vs single, so how can it be a no brainer? I'd call it a tie breaker.

Lots of variables. If you're getting ACA subsidies, conversion income reduces the amount of subsidy, or can eliminate it if you aren't careful (if the ACA cliff comes back).

RMDs can increase SS taxation, if you aren't already maxed out. They can also put you in a higher IRMAA tier.

Your investment rate of return can matter too, if a tIRA account grows such that RMDs put you into the next tax bracket.
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Old 06-27-2021, 03:41 PM   #143
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Originally Posted by RunningBum View Post
But what does that being a "no brainer" mean? Do you always convert more because of that? Unless you find an expiration date on yourself, you don't know how long you'll be MFJ vs single, so how can it be a no brainer? I'd call it a tie breaker.

I'd be happy to see that added in, maybe I'm the one with no brain!

Quote:


Lots of variables. If you're getting ACA subsidies, conversion income reduces the amount of subsidy, or can eliminate it if you aren't careful (if the ACA cliff comes back).
Lots of variables, takes someone smarter than me to put it together, and maybe even to run it.
Quote:


RMDs can increase SS taxation, if you aren't already maxed out. They can also put you in a higher IRMAA tier.
Yes.

Quote:


Your investment rate of return can matter too, if a tIRA account grows such that RMDs put you into the next tax bracket.
I'm afraid that is happening to me, but keep the pain coming!
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Old 06-28-2021, 04:58 AM   #144
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I posted this comment to another thread so if you have seen it forgive me for posting here also.



Our plan is to convert to top of 22% bracket and perhaps into 24% depending on news out of Washington on taxes.

Plan is to figure how much of the TIRA we want to spend or have on-hand and convert that much in the next 6 years. Then with remainder of TIRA we can take small draws each year if desired and use QCD for remaining RMDs. Then when we go the TIRAs will go to charities and Roth and other assets to the kids.

I know, it is arrogant to think we can know what will happen in the future, but we will plan and stay flexible. Our plan doesn't have us taking any from retirement savings when I turn 70, but who knows what may change. I think this is a good compromise between planning and being flexible and able to react. Also lets me think we didn't pay taxes we don't need to.

In other words, plan to meet our needs and make taxes a secondary consideration.


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Old 06-28-2021, 12:07 PM   #145
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Paper makes a lot of assumptions that IMHO don't apply to those already ER or those seeking to ER, like a married couple being in a relatively high federal tax bracket & staying a couple throughout retirement.

E.g. currently only my spouse works but in a low-paying job...thanks to the over-50 catch-up rule for her tax-deferred retirement plan plus the high cost of her employer's health plan there is little in wage income reported on her W-2.

So there's a lot of room for converting my rollover tIRA to Roth in the lowest Federal bracket.

Even counting state income taxes by breaking up the conversion over several years I doubt we'll pay more than 15% (effective) in total.

A nice hedge against future tax rates plus the virtual certainty of me dying much sooner than her during retirement.
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