Koolau
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
This jogged my memory. I recall when I was ERing ten years ago that the conventional wisdom claimed it was a bad idea (from a notional and mathematical point of view) to pay the taxes on a Roth conversion with money from inside my tIRA.
The thing is, I basically *have* no money outside my IRAs. I would have to pay it from my tax-deferred money.
In the scheme of things is this a significant consideration?
I agree that there are advantages IF you can pay the taxes on your Roth conversion from money NOT in an IRA (or 401(K)). Gumby points out that he effectively ends up with a "contribution" to his Roth by doing so - even though he is no longer w*rking. BUT, if you don't have the funds, I think there is still a very good reason to get "rid" of tIRA money - EVEN if you keep some in a taxable account. 1) Reducing RMDs in the future but also 2) If you should NEED a big chunk of cash someday (who knows what for) you won't find yourself double dipping from your tIRA and causing even higher tax bracket(s). At retirement, I always felt uncomfortable having HALF my stash in a 401(k)/tIRA. Having virtually ALL of it in a tIRA would be something I'd be working on as soon as possible. Even if you have to pay a tax person to sit down with you and figure the ins and outs, it might be well worth it if you don't feel comfortable with Turbo Tax or whatever. Keep in mind, you have a "good" problem as problems go. YMMV