Rustic23 said:
Do I draw down the IRAs and convert them to Roth IRAs keeping the annual withdrawal in the 15% bracket, or take the SS and let the IRA’s continue to grow till 70. If I do that, the withdrawal will be at the 25% rate. If I convert to Roth, I believe there is favorable tax treatment for estate purpose.
There sure is a favorable tax treatment. We're two years into Roth conversions that'll take 6-8 years.
You can do a combination of your ideas. You could draw on your IRAs for expenses if necessary (either penalty-free after age 59½ or via 72(t) if younger) while converting the rest of your IRAs to a Roth.
As for the conversion, I'd be astounded if future taxes are lower than today's brackets. Of course that speculation may not be rewarded if some other tax scheme blindsides us.
Another consideration, as you & others have pointed out, is SS. The RMDs for a conventional IRA can quickly raise your income high enough to tax your SS. So although a conversion calculator might not show the SS impact, you can raise your retirement tax bracket by having to take the RMDs.
A third issue is determining the RMDs. I'm watching my FIL, aided by his son the CPA, trying to understand the RMD for an IRA that's composed of pre-tax 401(k) employee contributions, 401(k) employer matches, after-tax 401(k) employee contributions, a lump-sum buyout, deductible IRA contributions, & non-deductible IRA contributions. It's getting done and it's correct, but let's just say that there's been considerable emotional & mental anguish over the calculations and "those ba$tards at the IRS & Congress". (Son the CPA is getting the mental part, we're getting the emotional part.) Conversion allows you to take out what you need, if anything, instead of RMD.
Finally, the Roth conversion allows you to sneak in more tax-free assets by paying the conversion taxes from other funds (if available). If you convert $100K of a conventional IRA that has a $50K basis, and pay the taxes from your taxable funds, then your Roth IRA starts its life with a $100K basis (instead of $50K). This is a great way to defer both the income and the associated taxes indefinitely.
If you haven't already, take a look at either of
Ed Slott's books-- at least one of them is probably in your local library-- and his
discussion board.