Back Door Roth Conversion Time
In June 2016, when Britain dropped out of the European Union, BREXIT, I asked the question on line, I know the market is going to drop, how can I take advantage of that? I was advised that it was a great time to do a Roth Conversion. This seems to be another one of those situations.
AAPL closed at 327.20 on Feb 12 and it closed at 242.21 on Mar 16, about a 26% drop which should recover when the market does.
Moving 50 shares of AAPL from your Traditional IRA to your Roth was a $16,360 conversion in February. Assuming a 30% combined Federal, State, and Local tax rate, the dollar cost would have been $4,908 or 30% of the shares so only 35 shares would be in your Roth.
Doing the same conversion today would only be $12,110, $3,633 in taxes. Using the shares for taxes would result in the same 35 shares in your Roth.
Doing the conversion with zero taxes withheld and paying the taxes from an alternative source, a Back Door Roth Contribution, would allow the entire 50 shares to move to the Roth while saving you about $1,275 in taxes.
Shirley is a widow, so our viewpoint is from someone who starts "their own" SSB at age 70.