That you keep saying this does not make it true. I will run through your case with actual numbers. We must consider total taxes paid in the two cases: (A) parent converts, (B) parent does not convert.
Let's put the parent at the bottome of the 22% bracket and have the heir $50000 into the 32% bracket. (I chose those because think that makes your case as strong as possible, but I actually think it doesn't matter.) I am using 2025 tax tables.
Case A
Parent pays $11157+0.22*$10,000 = $13,157.
Heir pays =$80398+(50000+0)*0.32 = $96,398.
Total taxes paid: $109,755
Case B
Parent pays $11157+0.22*0 = $11,157.
Heir pays =$80398+(50000+10000)*0.32 = $99,598
Total taxes paid: $110,755
The only thing that changed was whether the parent converted or not. As a direct consequence of this one action or inaction, the difference in taxes paid was $110,755 - $109,755 = $1,000.
Hmm, why the even number? Because [$110,755 - $109,755]/$10,000 = 0.1 which also = 0.32 - 0.22.
I've been in a high bracket for my entire career, especially at the end when I retired last year. To the average person I'm a rich guy so I'm very careful about discussing tax optimization strategies outside of this forum and outside of my "considered rich guy friends" group. A good friend of mine who has NW over $100M and I were shooting the bull after lunch and we started complaining about all of the inconveniences of home ownership. I just had our tankless water heater break last week and it was two half days of my time spent taking care of this problem. I told him under no uncertain circumstances will I ever be a landlord, ever, ever, ever because I'm at the point in my life where I hate these type of interrupts, including talking to a property manager to give permission for these things. I view these interrupts as what really upsets me.
To me, Roth conversions for those who are multi-X FI is not necessarily a productive use of time, paying taxes now and trying to optimize for a few percent savings to your heirs? Is it worth it? Only you can make that call. Your Case A and Case B is great if everyone lives a normal life expectancy. What happens if some or all of the parties die, for instance? Anyone ever factor in normal contingencies like dying earlier than expected? I ask again, is it worth it for all corner cases? Optimism aside, as we get older the probability of checking out early increases at an increasing rate. I get it that someone on the hairy edge of 1X FI might be trying to optimize a percent here or there but for those who are multi-X FI, is it worth your time and trouble? Just asking....
So my friend was complaining about buying a vehicle for his mother-in-law to replace her unreliable vehicle. It is a high demand vehicle and he is complaining about $1000 markup.
Fast forward, I told him, "Look at us here, we are two grumpy old rich guys complaining about stuff that really doesn't matter and it really gets us lathered up for no reason."
At that point, we both looked at each other and burst out laughing.
Point is, I'm beginning to embrace my self-awareness of being Grumpy Old Man. I'm really trying to avoid being characterized that way. I'm working out at the gym everyday now, building muscle mass and attempting to reduce my A1C, I get a haircut every three weeks and keep my nose hair and ear hair neatly trimmed, I dress like a 30-something most of the time (shorts/jeans, T-shirt, etc.), I try to walk upright at an aggressive pace, I try to stay out of others' way in public (i.e. crowded Costco or supermarket), I exit parking places very quickly when someone is waiting, I return my shopping cart to the appropriate cart collection area, etc. I observe my senior peers and all of things that used to annoy me when I was younger are coming home to roost now. There is no excuse for going to Costco when it is crowded and getting in the way because you're too slow or too unaware you're in the way.
Back to the Roth vs RMD, I really feel that the RMD and IRMMA problem is a privilege. This goes for paying high income taxes, high property taxes and dealing with taking care of your home. The alternative is not attractive, just look at those who don't have these problems. Do you want to trade places with them? I encourage people to optimize for these things but don't let the tail wag your dog. Show some self-awareness and if you are in the position to be annoyed about RMD, just think about the case for all of the people who never have to worry about RMD and Roth conversions because they have no savings. You don't want to be that guy.
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