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Roth conversions at 24%(CA -> WA)

Posted: Fri Jan 12, 2018 3:01 pm
by ray.james
I am wondering if this is a wise strategy. I have a possible job opportunity lined up that I am very much inclined to take and wife is on-board. The job will make me move from CA to WA. I have few weeks to decide yet. However one of the thoughts I am also having is;
Given the new tax brackets will it make sense to take the old 401k and do Roth conversions up to max 24% brackets. Most of this 401K money was saved during 28% + 9.3% bracket. We are 20-25 years from early retirement and even then might be 30 years before we withdraw.

Alternatively, if I pose the question as - Would I use Roth 401k at my new company, the possibility is yes as long as I am in 24% bracket. I am not sure if I will be in WA for life(then tax-advantaged might be better) but I think this is one of the lowest marginal tax bracket I might see in my working life and it might not stay there more than few years.(wife gets a promotion etc.,)

Thank you.

Re: Roth conversions at 24%(CA -> WA)

Posted: Fri Jan 12, 2018 3:05 pm
by NYC_Guy
Do it

Re: Roth conversions at 24%(CA -> WA)

Posted: Fri Jan 12, 2018 11:12 pm
by FiveK
ray.james wrote:
Fri Jan 12, 2018 3:01 pm
...I think this is one of the lowest marginal tax bracket I might see in my working life....
Even more to the point: what do you expect for a marginal tax rate when you are withdrawing after your working life?

Re: Roth conversions at 24%(CA -> WA)

Posted: Sat Jan 13, 2018 5:27 pm
by suemarkp
Not sure of the affects of State Income tax on this conversion or how much you may to each state when you move in the middle of a year. WA has no income tax (at least not yet but they are trying to push one in), so that could affect conversion timing after your residency changes.

Re: Roth conversions at 24%(CA -> WA)

Posted: Sat Jan 13, 2018 7:14 pm
by Wagnerjb
ray.james wrote:
Fri Jan 12, 2018 3:01 pm
I think this is one of the lowest marginal tax bracket I might see in my working life and it might not stay there more than few years.
I am 60 and I feel the same way. Like you, I am converting to a Roth up to the top of the 24% bracket, and I know several of my friends who are doing the same thing....for the same reasons.

The top of the 24% bracket is $315k, and in previous years an income of $315k would have put your marginal bracket at 33% to 36% and even higher due to phase outs. Make hay while the sun shines :D

Best wishes.