I will apologize in advance for yet another Roth thread. I have read many, and I find the various reasons pro and con rather confusing, especially as many of the conversations don't address my particular concerns.
So, here I go...
After 2020, DW and I will have used up enough of our after tax funds that in 2021 we will need to start tapping the IRAs for some living expenses.
I will turn 67 in 2020 (September), DW will turn 63. I started taking my SS at 62 and a few months, DW will start next year.
After the SS payments, what we will want to take from the IRA funds will amount to a WR of about 2.8% of the whole pool of IRAs. That will get us right to the doorstep of the 22% bracket. I won't have much in the way of LTCGs to protect at that point, so I am not too frightened of going into the 22% bracket if there is a benefit down the road.
To make matters a bit more confusing, of the total amount in the IRA pool,
62% of the total are my t-iras, which will be subject to my RMD schedule,
23% is DW's t-ira, subject to her RMD schedule
and 15% is an inherited IRA, i'm the beneficiary, and RMDs are ongoing.
So, if I wasn't concerned about leaving a widow and saddling her with the RMDs subject to tax rates on a single filer, and if I wasn't concerned about the likely tax hit to our heirs should there be a large sum of money in IRAs upon our deaths, I wouldn't really worry about this at all. But I am concerned about those two things.
One idea I have is that starting in 2021 I could convert to Roth IRAs up to the 22, or even 24 % tax brackets, OR..
I could just withdraw those same number of dollars, and leave them unsheltered.
Would it make much of a difference at our ages?
If I were to take more than the RMDs at this point for either strategy, it seems to me that I might as well take it from the inherited IRA, since those RMDs will step up more precipitously as I age, with a finite point in time when I would have to empty that account. Also, were I and DW to die with money in there, that is the least favorably treated, tax-wise, for any heirs.
I would much appreciate the input of the group.
Thanks.
So, here I go...
After 2020, DW and I will have used up enough of our after tax funds that in 2021 we will need to start tapping the IRAs for some living expenses.
I will turn 67 in 2020 (September), DW will turn 63. I started taking my SS at 62 and a few months, DW will start next year.
After the SS payments, what we will want to take from the IRA funds will amount to a WR of about 2.8% of the whole pool of IRAs. That will get us right to the doorstep of the 22% bracket. I won't have much in the way of LTCGs to protect at that point, so I am not too frightened of going into the 22% bracket if there is a benefit down the road.
To make matters a bit more confusing, of the total amount in the IRA pool,
62% of the total are my t-iras, which will be subject to my RMD schedule,
23% is DW's t-ira, subject to her RMD schedule
and 15% is an inherited IRA, i'm the beneficiary, and RMDs are ongoing.
So, if I wasn't concerned about leaving a widow and saddling her with the RMDs subject to tax rates on a single filer, and if I wasn't concerned about the likely tax hit to our heirs should there be a large sum of money in IRAs upon our deaths, I wouldn't really worry about this at all. But I am concerned about those two things.
One idea I have is that starting in 2021 I could convert to Roth IRAs up to the 22, or even 24 % tax brackets, OR..
I could just withdraw those same number of dollars, and leave them unsheltered.
Would it make much of a difference at our ages?
If I were to take more than the RMDs at this point for either strategy, it seems to me that I might as well take it from the inherited IRA, since those RMDs will step up more precipitously as I age, with a finite point in time when I would have to empty that account. Also, were I and DW to die with money in there, that is the least favorably treated, tax-wise, for any heirs.
I would much appreciate the input of the group.
Thanks.