I have kicked this around in a post earlier this year coming at it from a Roth conversion/taxable account usage strategy, but I'm still curious as to what point you just hit the brakes on Roth conversions and just let your needed withdrawals from your tax differed accounts play out. Sure, it depends on some crystal ball forecasting (i.e. future tax rates, portfolio growth) and one's specific situation. And yes, when 1 spouse takes a dirt nap, it hits the other spouse, but how many of you are really that worked up about this? I hear a good bit of talk about Roth conversions in the 12% range, but as you climb the scale closer to 24%, are the gymnastics really worth it?
My case, my portfolio is split roughly 50/50 in taxable and tax differed accounts. My planned withdrawal will have me close to the top end of the 24% marginal tax rate, assuming it was 100% taxable. After taking my naturally produced interest/dividends/capital gains from taxable accounts, my plan was to take the balance of my planned spend from my tax deferred accounts (never going over 24%). My thought is this will be a de facto Roth conversion. I suppose I could go a step further and Roth convert any additional $$ over my desired annual spend up to the maxed out 24%, but should I? Yes, I believe taxes will be higher in the future so I suppose I answered my own question.
But, if I estimate my future RMDs at 72 to be no more than my desired withdrawal, should I care about doing even more conversions today? I suppose if I believe taxes will be higher (I do) and if I care about the surviving spouse paying higher taxes as a single filer (maybe, but 1st world problem as there will be only 1 spender at that point). Maximizing legacy (not as important, but there will most likely be a bucket full)? I suppose it makes sense. There I go again, basically answering my own questions.
Hey, thanks for listening!
My case, my portfolio is split roughly 50/50 in taxable and tax differed accounts. My planned withdrawal will have me close to the top end of the 24% marginal tax rate, assuming it was 100% taxable. After taking my naturally produced interest/dividends/capital gains from taxable accounts, my plan was to take the balance of my planned spend from my tax deferred accounts (never going over 24%). My thought is this will be a de facto Roth conversion. I suppose I could go a step further and Roth convert any additional $$ over my desired annual spend up to the maxed out 24%, but should I? Yes, I believe taxes will be higher in the future so I suppose I answered my own question.
But, if I estimate my future RMDs at 72 to be no more than my desired withdrawal, should I care about doing even more conversions today? I suppose if I believe taxes will be higher (I do) and if I care about the surviving spouse paying higher taxes as a single filer (maybe, but 1st world problem as there will be only 1 spender at that point). Maximizing legacy (not as important, but there will most likely be a bucket full)? I suppose it makes sense. There I go again, basically answering my own questions.
Hey, thanks for listening!