Hi folks,
I'm 55 years old. I have been doing Roth conversions to the top of the 24% tax bracket for two years. While I'm slowly whittling down a tIRA the market continues to replenish the account (a good problem).
My plan has been to continue to convert until/unless the federal tax brackets revert in 2026 and push me into a higher bracket. I don't expect my future marginal tax rate to be lower than it is today, and probably it will be higher.
At the rate I'm going I won't come close to draining the tIRA before 2026. I won't convert beyond the 24% tax bracket so if current rates expire and revert then I'll have reached a stopping point. However, in the meantime I'm finding the conversion process expensive (paying taxes from cash accounts) and cutting into my ability to finance other priorities.
My question is when did you reach the "good enough" point and stop conversions? I realize everyone's situation is different but possibly there are some rules of thumb.
Some have suggested stopping once there's roughly equal amounts in tax-deferred and tax-free accounts. Or roughly equal amounts in tax-advantaged and taxable accounts. Others have focused on RMDs and trying to keep their taxable income low to avoid Medicare surcharges or taxes on Social Security. What was/is your stopping point?
Also, is there a tIRA size you would you consider too small to bother converting? I'm working on a $500k account, which is not very big now but by 2038 when I turn 72 the account could be 3x that size. I figured I'd best whittle it down now while the 2017 tax rates are in effect.
I'm 55 years old. I have been doing Roth conversions to the top of the 24% tax bracket for two years. While I'm slowly whittling down a tIRA the market continues to replenish the account (a good problem).
My plan has been to continue to convert until/unless the federal tax brackets revert in 2026 and push me into a higher bracket. I don't expect my future marginal tax rate to be lower than it is today, and probably it will be higher.
At the rate I'm going I won't come close to draining the tIRA before 2026. I won't convert beyond the 24% tax bracket so if current rates expire and revert then I'll have reached a stopping point. However, in the meantime I'm finding the conversion process expensive (paying taxes from cash accounts) and cutting into my ability to finance other priorities.
My question is when did you reach the "good enough" point and stop conversions? I realize everyone's situation is different but possibly there are some rules of thumb.
Some have suggested stopping once there's roughly equal amounts in tax-deferred and tax-free accounts. Or roughly equal amounts in tax-advantaged and taxable accounts. Others have focused on RMDs and trying to keep their taxable income low to avoid Medicare surcharges or taxes on Social Security. What was/is your stopping point?
Also, is there a tIRA size you would you consider too small to bother converting? I'm working on a $500k account, which is not very big now but by 2038 when I turn 72 the account could be 3x that size. I figured I'd best whittle it down now while the 2017 tax rates are in effect.
