I’m 49 and about to execute FIRE this month. I’m beyond excited and ready for the next chapter. Now to my question:
MFJ. After my brief salary for 2022 and after tax dividends (and std deduction, etc.), I will have around $70K of space remaining in the 12% ordinary income bracket, aka the 0% LT capital gain bracket. I’m trying to figure out how to use that space for a Roth conversion and a stock sale.
I’m going to sell a stock that will result in around $25K of LTCG. I’m selling that stock no matter what (don’t believe in the company’s future, and the net cash would bring me to 2 years of living expenses in cash).
I also want to start doing Roth conversions now that I’ll be in a lower tax bracket. I definitely want to do a $45K conversion, which would be taxed at 12% and then my stock sale would be at the 0% LTCG rate.
My question is whether I should instead use the entire 12% space for a Roth conversion. Doing so would push my $25K LTCG into the 15% CG rate. For context, I have enough after-tax investments to make it to 59.5 and beyond. My pre-tax accounts are around $500K in Roth and $1.5M in 401k/IRA.
Any thoughts or advice on my situation? The notion of 0% LTCG is very tempting, but I want to avoid being short sighted. Thanks so much.
MFJ. After my brief salary for 2022 and after tax dividends (and std deduction, etc.), I will have around $70K of space remaining in the 12% ordinary income bracket, aka the 0% LT capital gain bracket. I’m trying to figure out how to use that space for a Roth conversion and a stock sale.
I’m going to sell a stock that will result in around $25K of LTCG. I’m selling that stock no matter what (don’t believe in the company’s future, and the net cash would bring me to 2 years of living expenses in cash).
I also want to start doing Roth conversions now that I’ll be in a lower tax bracket. I definitely want to do a $45K conversion, which would be taxed at 12% and then my stock sale would be at the 0% LTCG rate.
My question is whether I should instead use the entire 12% space for a Roth conversion. Doing so would push my $25K LTCG into the 15% CG rate. For context, I have enough after-tax investments to make it to 59.5 and beyond. My pre-tax accounts are around $500K in Roth and $1.5M in 401k/IRA.
Any thoughts or advice on my situation? The notion of 0% LTCG is very tempting, but I want to avoid being short sighted. Thanks so much.