Although they seem self-evident or rhetorical, these are questions that are difficult to fit into even Fairmark's excellent Roth IRA conversion calculator:
Originally Posted by elroy
What am I missing?
1. If you pay the taxes on the Roth conversion from taxable funds, then it has the equivalent effect of raising the basis in your new Roth. Example: You convert your $100K IRA (which is loaded with unrealized gains) and pay $15K tax. Your Roth IRA starts with $85K. If you pay the tax from other sources then your Roth IRA starts at a basis of $100K (effectively a $15K contribution) and is no longer taxed.
1a. Compounding in your new Roth runs amok because you're not required to take RMD withdrawals.
2. Will your RMDs, even after 72(t), result in your Social Security being taxed?
3. Will taxes 20 years from now be lower than they are today?
4. If you don't have to take RMDs in retirement, what tax bracket will you be in? For many it's the 15% bracket.
5. Can you convert your IRA to a Roth in several years' increments up to the top of the 15% tax bracket? If so, could you do that conversion when you retire at age 50-55 and are no longer in the 25-28% bracket?
6. Could you hedge your bets by converting some of your IRA(s) to Roth(s)?
7. Do you wish to calculate RMDs for the rest of your life (along with doing your own taxes, tracking your investments, mowing your own lawn, and butchering your own beef cattle)? If you think this isn't a problem then I'll forward my FIL's RMD comments to you...