What is the math on Roth conversions of depressed assets

[pb4uski]

To further the cash flow illustration
Let's say you can convert all your tax deferred in one year. The cost of doing so went down. It takes less cash to complete the conversion, improving cash flow.

I was not making any assumption about loss carryforwards.

And likewise, I was not making any assumption about converting all tax-deferred in one year.... who would do that? Unless they don't have much in tax deferred. But given your presumption of converting all I now get your cash flow comment... I just don't see converting all in one year as realistic for most people.

 

[Montecfo]

And likewise, I was not making any assumption about converting all tax-deferred in one year.... who would do that? Unless they don't have much in tax deferred. But given your presumption of converting all I now get your cash flow comment... I just don't see converting all in one year as realistic for most people.

It was simply an illustration, not a required assumption. You could also convert the same number of shares of xyz stock as you planned to previously. Tax is lower, preserves cash that is in taxable.

Of course you could choose to convert more shares than you could have a month ago, or fill a tax bracket. In doing so you will be converting more shares than you could have a month ago for the same tax cost. Again, cash flow.

 

[RetireBy90]

So having followed this thread and several others on Roth conversions I think There are 2 separate questions.
1) Should I convert ? And
2) how does this depressed value of TIRA affect how much to convert this year.
There are many other details to consider such as how much should I convert each year, where to get the $ to pay taxes from, and others. But for OP, first, should you convert ? Sounds like you already considered this and want to convert. 2nd, math behind converting depressed assets. Recent markets are about 20% off the earlier highs. So if I were to convert $100K in Jan, I would pay say 22% in taxes or $22000. If I were to convert same asset today while it is only worth $80K, my tax due would be $17,600 saving $4,400 in taxes.
If you have a multi year plant to convert (like I do), then your math might be more like convert asset worth $80K today and since I have already converted to top of 22% bracket tax on additional $80K would be at 24% or $19,200 this tear or wait for it to rebound next year and pay $22,000 next year.

Just one way to look at it if I understand your OP.