Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
We are obliged to take MRDs and these grow to a large % in later years. If one stays in the same tax bracket for a long time, is it worth rolling funds from trad. IRA to a Roth and pay the income tax now, rather than wait and pay the higher income tax on very large MDRs later?
I assume that rolling only sufficient funds to bring taxable income up to the top of one's tax band would be beneficial. Does anyone know of authoritive articles on this topic?
- Posts: 22
- Joined: 22 Mar 2010
- Location: San Antonio Texas
If you're already at RMD age then converting is of a nominal benefit since the assumption is that you can't convert much above the RMD and stay in current brackets. There's a lot more that goes into the answer so it's hard to tell from the data you provided.
- Posts: 1053
- Joined: 22 Dec 2012
I don't think "rolling" is the correct term. Maybe it is converting.
We do this, I am not positive it is going to pay off but it may very well pay off. Also, it should benefit our heirs.
Also, I have decided to use the QCD (Qualified Charitable Distribution) this year for most non-minor charitable contributions( since we don't itemize) rather than limit it to RMD amount. Again, not positive it will help, but I think it will, since we will then contribute that much to our taxable account rather than "blow" it. I used the QCD last year for my RMD amount so it will not be taxed.
Not only do the %s increase with age, there is a likelihood of one survivor of a married couple being in a higher tax bracket if income is not cut exactly in half.
Keeping more/most of fixed income in the IRA rather than elsewhere may keep it from growing as fast as the other accounts. That seems to be recommended in the Wiki.
- Posts: 1621
- Joined: 1 Mar 2009
If you're already taking RMDs, remember that you have to take the RMD before doing any conversions........and since all of your TIRAs are considered to be 1 big TIRA, you need to fulfill that RMD for all TIRAs before doing any conversions.
- Posts: 2354
- Joined: 22 Sep 2008
Return to Investing - Theory, News & General
Who is online
Users browsing this forum: Google [Bot], hudson, JamesSFO, Longtimelurker, MP173, schuyler74, shipwreck, StarbuxInvestor, Yahoo [Bot] and 46 guests