We often see posts encouraging Roth conversions to fill to the 12% bracket, and that seems a no brainer. If you convert to 12% and find yourself forced into the 22% bracket from 70 on, you may regret it. Is there more universal advice?
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Knowing everyone has to assess all the other factors that go into the Roth conversion decision. ***
After the analysis I’ve been though, and though people have probably already said it (and I missed it) - I’m thinking a slightly better
starting point might be:
Convert to the fill whatever bracket you’ll be in from age 70 on if you hadn’t done any conversions.
IOW if you do NO conversions and that will put you in the 22% (24%, 32%...) bracket from age 70 on due to Soc Sec, RMD, distributions, cap gains and other income, you’ll probably reduce taxes by converting up to the 22% (24%, 32%...) income bracket every year before age 70. If tax rates don’t change, your nest egg final amount will be about the same - you’ll pay less in federal taxes overall, but you’ll forego the returns on the money used to pay taxes on conversions. However, there are other worthwhile $ benefits to widows, heirs, etc. And if future tax rates take more (as I expect long term), you’ll save even more on federal taxes and increase your nest egg final amount some. State taxes you’ll have to consider separately.
https://www.betterment.com/resources/common-roth-conversion-mistakes/