RobbieB
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Mar 22, 2016
- Messages
- 8,968
waited too long. now it makes no sense to do them.
Me too.
waited too long. now it makes no sense to do them.
The second was meant to mean maximizing conversions to the top of the 12% threshold. The first was deliberately less. Maybe I could’ve chosen better words.Aren't the first two categories the same thing?
Where the poll uses "up to" should one mentally add "the top of," not "the start of"?For example how much I convert every year is the amount that brings our taxable income to the limit of the 22% bracket, but not over.
But I didn't and don't convert up close to the top of a particular tax bracket and don't particularly recommend that others do.
Instead, I Roth converted enough to "levelize" my AGI based on my projected AGI at age 72 with RMDs and no further Roth conversions.
So my annual Roth conversion amounts have been modest, in the $30k to $40k range.
I also try not to keep my AGI under the next higher IRMAA tier threshold, which fortunately is now indexed to inflation...
Aren't the first two categories the same thing?
Could you articulate your reasoning?
The most common argument I've seen is for generally levelizing marginal tax rates.
I know pb4uski levelizes effective tax rates, which I don't completely understand but I respect his abilities so I'm probably missing something there.
I try to maximize after-tax NPV, accounting for federal and IRMAA and a bit for ACA. Sort of a poor-man's manual I-ORP in my Excel spreadsheet. This does seems to align with the popular levelizing marginal tax rates notion above.
But I'm also considering doing a one year "pulse" where I do one large conversion in about two years, taking the tax hit once in an effort to shift a large chunk of the IRA early, which obviously has a bigger effect on the tax torpedo issue. It also seems to line up with I-ORP's usual suggestion.
For someone with many years to convert, 21 years in my case, it can be hard to levilize since the tIRA is growing as you convert it. So I'm more inclined to go to the top of a limit such as a bracket, 0% LTCGs, ACA subsidy cliff, and eventually IRMAA bumps. Otherwise I agree with your approach, except that I would take more advantage of 24%, knowing that without congressional action that bracket would return to 28%.I'm 71 and have been Roth converting well into the 24% Federal tax bracket the last few years, previously the 28% tax bracket.
But I didn't and don't convert up close to the top of a particular tax bracket and don't particularly recommend that others do.
Instead, I Roth converted enough to "levelize" my AGI based on my projected AGI at age 72 with RMDs and no further Roth conversions.
So my annual Roth conversion amounts have been modest, in the $30k to $40k range.
I also try to keep my AGI under the next higher IRMAA tier threshold, which fortunately is now indexed to inflation...
No, all answers were meant to be to the top of the bracket, except the first. Unfortunately I have a history of misguided polls...They appear to be.
Both have you converting an amount such that your Taxable Income is below the start of the 12% bracket...
Me three.Me too.
Me three.
Or more accurately, we were in a high tax bracket up until turning 70.5 when we started taking RMD withdrawals. This year our IRMAA payments, are already twice the base rate and would increase further with Roth conversions. Plus our state phases out the state standard deduction and personal exemptions over certain thresholds. We already lose a portion of those deductions as it is, without conversions and would lose more with conversions. And then there is the 3.8% NIIT which would apply to more of our investment income if we converted. So the effective tax on any conversions is extremely high.
Unfortunately I have a history of misguided polls...
https://www.tax-brackets.org/federaltaxtable/2022
I had to look it up.
Wanted to convert up to $172,500 (24% - Joint), but probably spilled a few dollars into 32%.