I am a complete novice at retirement plans, and everything I know I've learned in the past 12 months.
I will intentionally simplify this to make it easier for you fine people to help as well as for me to understand.
Me (57) and wife (65) have traditional IRAs accounts totaling over $4MM.
We (MFJ) live in New York, and typically fall in one of the top 3 marginal income tax brackets.
I think there is a likelihood that for 2024 and 2025, we might be in the 24% or 32% fed tax bracket.
I suspect that for 2026 and beyond, it will be the same -- 24 or 32% bracket.
These are effectively guesses -- impossible to know with any degree of certainty.
I have read a whole bunch of ROTH conversion articles (including the BH wiki), and threads on this forum, and the BETR article by Vanguard. I am not saying I fully understand, rather that I have a very basic understanding.
I know that so many articles and threads spend quite a bit of time on the decision making process regarding if and when to convert, but I'm having a hard time with it.
I understand that if I was certain of this year vs. later year's tax brackets, the analysis would be a lot easier. And I understand that the advantage of having funds in ROTH is both the tax free growth and lack of RMDs -- which, together, are not to be ignored.
Of course, if I convert and put the ROTH funds into VTI and there is a market collapse, I'll be way behind, but I think the "loss" would be the taxes paid, as the funds would be in VTI in the traditional IRA if I hadn't converted. Correct?
I can pay the taxes on any conversion with non-retirement funds.
How would I go about figuring out if to convert and how much? Are there factors I am leaving out?
Thank you.
I will intentionally simplify this to make it easier for you fine people to help as well as for me to understand.
Me (57) and wife (65) have traditional IRAs accounts totaling over $4MM.
We (MFJ) live in New York, and typically fall in one of the top 3 marginal income tax brackets.
I think there is a likelihood that for 2024 and 2025, we might be in the 24% or 32% fed tax bracket.
I suspect that for 2026 and beyond, it will be the same -- 24 or 32% bracket.
These are effectively guesses -- impossible to know with any degree of certainty.
I have read a whole bunch of ROTH conversion articles (including the BH wiki), and threads on this forum, and the BETR article by Vanguard. I am not saying I fully understand, rather that I have a very basic understanding.
I know that so many articles and threads spend quite a bit of time on the decision making process regarding if and when to convert, but I'm having a hard time with it.
I understand that if I was certain of this year vs. later year's tax brackets, the analysis would be a lot easier. And I understand that the advantage of having funds in ROTH is both the tax free growth and lack of RMDs -- which, together, are not to be ignored.
Of course, if I convert and put the ROTH funds into VTI and there is a market collapse, I'll be way behind, but I think the "loss" would be the taxes paid, as the funds would be in VTI in the traditional IRA if I hadn't converted. Correct?
I can pay the taxes on any conversion with non-retirement funds.
How would I go about figuring out if to convert and how much? Are there factors I am leaving out?
Thank you.
Statistics: Posted by josephny — Tue Jul 16, 2024 6:48 am