Convert to ROTH or stick with Traditional IRA

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s6ZS7s
Posts: 11
Joined: Mon Jan 16, 2017 12:52 pm

Convert to ROTH or stick with Traditional IRA

Post by s6ZS7s » Sat Jul 06, 2019 10:12 am

How do I calculate if converting to ROTH makes sense? I'm 100% at Vanguard and it seems like it's a fairly straightforward process except for the TAXES :-).

-49 years old
-currently in 35% tax bracket
-Traditional IRA value is $650k
-Traditional IRA was a series of previous 401k rollovers and market appreciation

I don't plan on touching money until 70's... of coarse I have too with RMDs.

I do understand it's a matter of pay now or pay later (no escaping taxes) but at this moment feeling is that current TAX brackets probably won't get better. [OT comment removed by admin LadyGeek]

I do have plenty of cash currently sitting in short term bonds to pay taxes that would be due in April but really looking for "the data" that shows if this is a sound or flawed strategy.

Thank you

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David Jay
Posts: 6832
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Convert to ROTH or stick with Traditional IRA

Post by David Jay » Sat Jul 06, 2019 10:38 am

You should not be converting in the 35% bracket.

Many here are doing substantial conversions in the years of lower income (i.e. living out of savings) between retirement and the start of SS and/or RMDs.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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ruralavalon
Posts: 16167
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Convert to ROTH or stick with Traditional IRA

Post by ruralavalon » Sat Jul 06, 2019 10:50 am

s6ZS7s wrote:
Sat Jul 06, 2019 10:12 am
How do I calculate if converting to ROTH makes sense? I'm 100% at Vanguard and it seems like it's a fairly straightforward process except for the TAXES :-).

-49 years old
-currently in 35% tax bracket
-Traditional IRA value is $650k
-Traditional IRA was a series of previous 401k rollovers and market appreciation

I don't plan on touching money until 70's... of coarse I have too with RMDs.

I do understand it's a matter of pay now or pay later (no escaping taxes) but at this moment feeling is that current TAX brackets probably won't get better. [OT comment removed by admin LadyGeek]

I do have plenty of cash currently sitting in short term bonds to pay taxes that would be due in April but really looking for "the data" that shows if this is a sound or flawed strategy.

Thank you
When do you expect that you might retire?

The time to do conversions to Roth is after retirement but before Required Minimum Distributions (RMDs) start, when your tax bracket will be lower.

Are you currently doing backdoor Roth IRA contributions?

Does any work-based plan (402k, 403b, 467, TSP) you are currently eligible to use permit Roth contributions?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Wiggums
Posts: 1219
Joined: Thu Jan 31, 2019 8:02 am

Re: Convert to ROTH or stick with Traditional IRA

Post by Wiggums » Sat Jul 06, 2019 10:58 am


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