Independent
Thinks s/he gets paid by the post
- Joined
- Oct 28, 2006
- Messages
- 4,629
When I retired, we had enough money in taxable investments to cover expenses for a few years. We spent that money first, and that put us in the 15% marginal tax bracket.
Since I figured we'd be in the 25% bracket eventually, I converted some traditional IRA to Roth IRA, roughly up to the top of the 15% bracket. (I wasn't worried about going a little over since I figured that 25% now was no worse than 25% later.)
I think that's the "conventional wisdom" on tIRA => Roth IRA conversions.
But, now I'm thinking I should have filled up the 25% bracket as well.
When RMDs hit, we'll be in the 25% bracket. So we'll spend the 25% on FIT, then put any money we don't spend into taxable accounts.
It seems like I should try to get it out of the tIRA sooner. Sure, we'll spend the 25% on FIT in order to roll to the Roth. But, once it's there, it will be in a tax free account.
Right now, this seems like "duh, why didn't I see that sooner". Have I been missing something that everyone else around here knows? Or, maybe I'm missing the downside of conversions?
Since I figured we'd be in the 25% bracket eventually, I converted some traditional IRA to Roth IRA, roughly up to the top of the 15% bracket. (I wasn't worried about going a little over since I figured that 25% now was no worse than 25% later.)
I think that's the "conventional wisdom" on tIRA => Roth IRA conversions.
But, now I'm thinking I should have filled up the 25% bracket as well.
When RMDs hit, we'll be in the 25% bracket. So we'll spend the 25% on FIT, then put any money we don't spend into taxable accounts.
It seems like I should try to get it out of the tIRA sooner. Sure, we'll spend the 25% on FIT in order to roll to the Roth. But, once it's there, it will be in a tax free account.
Right now, this seems like "duh, why didn't I see that sooner". Have I been missing something that everyone else around here knows? Or, maybe I'm missing the downside of conversions?