Estimating Space for Roth Conversions

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HeelaMonster
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Estimating Space for Roth Conversions

Post by HeelaMonster »

Last year was my first year in retirement and first making Roth conversions to whittle down sizeable tax-deferred accounts. I made the mistake of converting early in the year, working with fairly rough estimates of yearly income. The end result was that I overshot the mark I had set, which would have kept us below the first threshold for the IRMAA surcharge (current age 64, and I still have hopes of appealing IRMAA when we are notified, but that's a different topic for a different day). The reasons for my imprecise estimates include final payouts from prior employment (unused sick leave, etc), spouse still working, unexpected income from consulting during the year, and sale of old investments. With another year of retirement under my belt, those variables have mostly stabilized or disappeared, but my question today relates to DISTRIBUTION of DIVIDENDS AND CAPITAL GAINS... which I also underestimated.

My plan this year is to wait until December before pulling the trigger, to maximize the time I have to firm up my estimates of space for Roth conversion. As above, I feel relatively confident in tracking those other variables, but am still uncertain how to get an accurate read on the total dividends and capital gains I can expect for the year... even if I wait until December. All funds are now in VG, after consolidation that took place last year (another reason for poor estimates, with too many moving parts!).

On that background, any tips for estimating space for Roth conversions, to stay within projected target?
livesoft
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Re: Estimating Space for Roth Conversions

Post by livesoft »

December 31, 2021 is a Friday, so you should be able to do your Roth conversion on that day. You should have your tax return/information already all entered into the tax-prep software that you bought on Thanksgiving weekend. Make the update, do the "What if?", set the amount, and pull the trigger.

We actually do an earlier Roth conversion that is under what we intend to do, then top it up on December 31st [last market-open day] with another conversion. We have to wait because my spouse gets a bonus of an unknown amount in the last week of December.
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marcopolo
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Re: Estimating Space for Roth Conversions

Post by marcopolo »

livesoft wrote: Tue Sep 14, 2021 4:36 pm December 31, 2021 is a Friday, so you should be able to do your Roth conversion on that day. You should have your tax return/information already all entered into the tax-prep software that you bought on Thanksgiving weekend. Make the update, do the "What if?", set the amount, and pull the trigger.

We actually do an earlier Roth conversion that is under what we intend to do, then top it up on December 31st [last market-open day] with another conversion. We have to wait because my spouse gets a bonus of an unknown amount in the last week of December.
How do you get a reasonable estimate of qualified vs. non-qualified dividends? That always seems to be the last piece of uncertainty for me when trying to figure out Roth Conversion space.
Once in a while you get shown the light, in the strangest of places if you look at it right.
livesoft
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Re: Estimating Space for Roth Conversions

Post by livesoft »

marcopolo wrote: Tue Sep 14, 2021 5:08 pmHow do you get a reasonable estimate of qualified vs. non-qualified dividends? That always seems to be the last piece of uncertainty for me when trying to figure out Roth Conversion space.
1 If not published yet, then use percentages published for previous tax year.

2. Otherwise, if estimates published, then use them.

Our taxable account is 100% equities of usual players: VTI, VEA, VEU, VV, so the estimates have been very good. Or did you mean something else?
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RetiredAL
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Re: Estimating Space for Roth Conversions

Post by RetiredAL »

HeelaMonster wrote: Tue Sep 14, 2021 4:31 pm .......
On that background, any tips for estimating space for Roth conversions, to stay within projected target?
When faced with a "not to exceed" and it needs to done earlier in the year, I only transact 80% of estimated amount and then do a smaller settle-up after all income has finalized in Dec. In practice, I generally just wait until after the Dec dividend amounts have posted. Why create angst.
diy60
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Re: Estimating Space for Roth Conversions

Post by diy60 »

HeelaMonster wrote: Tue Sep 14, 2021 4:31 pm The end result was that I overshot the mark I had set, which would have kept us below the first threshold for the IRMAA surcharge
Just out of curiosity, how far did you overshoot? Based on today’s CPI-U number the 1st tier IRMAA next year will be 91/182.

As others have indicated, save a top off conversion amount for the last trading day or there abouts.
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Mlm
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Re: Estimating Space for Roth Conversions

Post by Mlm »

Vanguard publishes estimated year end distributions in early December. I find it useful especially for funds that have erratic capital gains. I still leave some leeway and top everything off at month end. Here are there December 2020 estimates. https://institutional.vanguard.com/VGAp ... fo12092020
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tibbitts
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Re: Estimating Space for Roth Conversions

Post by tibbitts »

How close are you trying to estimate? How much did you miss by before? As far as I know you won't be aware of all the distribution amounts until after the close of trading on the last day of the year.

Obviously the optimal solution would be for the rules to allow conversions up until the tax filing deadline.
Topic Author
HeelaMonster
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Re: Estimating Space for Roth Conversions

Post by HeelaMonster »

livesoft wrote: Tue Sep 14, 2021 4:36 pm December 31, 2021 is a Friday, so you should be able to do your Roth conversion on that day. You should have your tax return/information already all entered into the tax-prep software that you bought on Thanksgiving weekend. Make the update, do the "What if?", set the amount, and pull the trigger.

We actually do an earlier Roth conversion that is under what we intend to do, then top it up on December 31st [last market-open day] with another conversion. We have to wait because my spouse gets a bonus of an unknown amount in the last week of December.
Thanks, I was planning to do that earlier (partial) conversion, as well. That all makes sense.

Given that (final/summary) tax info never arrives until well into the next year, can I assume you are just lifting distribution details from the transaction history for each individual fund/account?
Last edited by HeelaMonster on Tue Sep 14, 2021 9:06 pm, edited 2 times in total.
Topic Author
HeelaMonster
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Re: Estimating Space for Roth Conversions

Post by HeelaMonster »

diy60 wrote: Tue Sep 14, 2021 8:13 pm
HeelaMonster wrote: Tue Sep 14, 2021 4:31 pm The end result was that I overshot the mark I had set, which would have kept us below the first threshold for the IRMAA surcharge
Just out of curiosity, how far did you overshoot? Based on today’s CPI-U number the 1st tier IRMAA next year will be 91/182.

As others have indicated, save a top off conversion amount for the last trading day or there abouts.
Good point, I was looking at IRMAA brackets for 2020. But I gather (from your comment) that the number that really counts is the one for 2022... or did I misinterpret that? I know there is a two-year lookback, but haven't dealt with Medicare at all yet.

To your question, taxable income (MFJ) was $165k, MAGI was $191k. So if $182k is the IRMAA tier in effect next year, we overshot by $9000. My understanding is that appeal (request for reconsideration) is likely to be granted on the basis of life-changing event (retirement).
Last edited by HeelaMonster on Tue Sep 14, 2021 9:14 pm, edited 2 times in total.
Topic Author
HeelaMonster
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Re: Estimating Space for Roth Conversions

Post by HeelaMonster »

tibbitts wrote: Tue Sep 14, 2021 8:41 pm How close are you trying to estimate? How much did you miss by before? As far as I know you won't be aware of all the distribution amounts until after the close of trading on the last day of the year.

Obviously the optimal solution would be for the rules to allow conversions up until the tax filing deadline.
It wouldn't bother me to fall a few $1000 short, if I could get in the ballpark. See immediately preceding post for last year's details (overshot by $9000).

Agree that allowing conversions up to tax filing (like with IRA contributions) would make this easier!
tibbitts
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Re: Estimating Space for Roth Conversions

Post by tibbitts »

HeelaMonster wrote: Tue Sep 14, 2021 9:03 pm
tibbitts wrote: Tue Sep 14, 2021 8:41 pm How close are you trying to estimate? How much did you miss by before? As far as I know you won't be aware of all the distribution amounts until after the close of trading on the last day of the year.

Obviously the optimal solution would be for the rules to allow conversions up until the tax filing deadline.
It wouldn't bother me to fall a few $1000 short, if I could get in the ballpark. See immediately preceding post for last year's details (overshot by $9000).

Agree that allowing conversions up to tax filing (like with IRA contributions) would make this easier!
There's probably some obvious reason why the rules permit an IRA contribution in the following year, but not a conversion. Anybody know what it is?
DSInvestor
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Re: Estimating Space for Roth Conversions

Post by DSInvestor »

Roth conversions are a special category of IRA distribution or withdrawal which are driven by calendar year. The 1099-R associated with Roth conversions and other IRA distributions are by calendar year. It would be a mess if IRA withdrawal were calendar year and Roth conversions were not.

IRA contributions are not withheld from paychecks and eligibility for contributions or deductions may rely on year end tax data that is not readily available until after year end (1099 tax slips and even tax return preparation).
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RetiredAL
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Re: Estimating Space for Roth Conversions

Post by RetiredAL »

HeelaMonster wrote: Tue Sep 14, 2021 4:31 pm Last year was my first year in retirement ..... I still have hopes of appealing IRMAA when we are notified, but that's a different topic for a different day).
Did you receive wages during 2020 (retired sometime during the year 2020)?

If yes, I believe that's grounds for re-computing the IRMAA earnings test for year 2022.
livesoft
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Re: Estimating Space for Roth Conversions

Post by livesoft »

HeelaMonster wrote: Tue Sep 14, 2021 8:45 pmGiven that (final/summary) tax info never arrives until well into the next year, can I assume you are just lifting distribution details from the transaction history for each individual fund/account?
Yes.
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Chip
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Re: Estimating Space for Roth Conversions

Post by Chip »

marcopolo wrote: Tue Sep 14, 2021 5:08 pm How do you get a reasonable estimate of qualified vs. non-qualified dividends? That always seems to be the last piece of uncertainty for me when trying to figure out Roth Conversion space.
For my particular conversion strategy it doesn't matter. I have been attempting to hit the top of the 12% bracket with taxable income, so the only the total amount of dividends has been important for my conversion calculation.
Topic Author
HeelaMonster
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Re: Estimating Space for Roth Conversions

Post by HeelaMonster »

Thanks to you all for comments and questions. Very helpful!
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ThankYouJack
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Re: Estimating Space for Roth Conversions

Post by ThankYouJack »

I'm wondering the same thing, but a different scenario as I'll be looking to fill the 12% space this year.

What I plan to do is look at my paystub in December and determine my taxable W2 income for the year. I believe the only other taxable income I'll have (other than the Roth conversion) is a small amount from dividends. So I'll estimate and add the dividend amount for the year (it'll be small enough where I won't bother factoring in qualified dividends or waiting until December 22nd to get the final dividend payment). I'll then subtract $3,000 from a carry over loss, and subtract $25,100 for the standard married filing jointly deduction. The difference between that total and $81,050 should be my estimate Roth space, correct?

I'd rather be under but not a huge deal if I'm over by a bit. Seems simple enough, but let me know if you think I'm missing anything or if there's a better approach.
mtmingus
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Re: Estimating Space for Roth Conversions

Post by mtmingus »

I use

https://www.mortgagecalculator.org/calc ... ulator.php

after all 1099% have arrived.
smitcat
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Re: Estimating Space for Roth Conversions

Post by smitcat »

ThankYouJack wrote: Wed Sep 15, 2021 11:40 am I'm wondering the same thing, but a different scenario as I'll be looking to fill the 12% space this year.

What I plan to do is look at my paystub in December and determine my taxable W2 income for the year. I believe the only other taxable income I'll have (other than the Roth conversion) is a small amount from dividends. So I'll estimate and add the dividend amount for the year (it'll be small enough where I won't bother factoring in qualified dividends or waiting until December 22nd to get the final dividend payment). I'll then subtract $3,000 from a carry over loss, and subtract $25,100 for the standard married filing jointly deduction. The difference between that total and $81,050 should be my estimate Roth space, correct?

I'd rather be under but not a huge deal if I'm over by a bit. Seems simple enough, but let me know if you think I'm missing anything or if there's a better approach.
You likley have it all but perhaps think about these as well.
If you had any tax refunds this year....any cap gains....unemployment or other extra checks....inherited assetts/IRA's/etc.....all I can think of right now.
tibbitts
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Re: Estimating Space for Roth Conversions

Post by tibbitts »

ThankYouJack wrote: Wed Sep 15, 2021 11:40 am I'd rather be under but not a huge deal if I'm over by a bit. Seems simple enough, but let me know if you think I'm missing anything or if there's a better approach.
Yes, this is really only an issue for cliffs, like with IRMAA, NIIT, or maybe ACA. For brackets, going over a little won't matter.
Topic Author
HeelaMonster
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Re: Estimating Space for Roth Conversions

Post by HeelaMonster »

mtmingus wrote: Wed Sep 15, 2021 11:47 am I use

https://www.mortgagecalculator.org/calc ... ulator.php

after all 1099% have arrived.
That would be nice. Problem is, most of those don't arrive until well into the new year... by which time the door has shut on conversions for the calendar year just past?
Last edited by HeelaMonster on Wed Sep 15, 2021 12:15 pm, edited 1 time in total.
ThankYouJack
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Re: Estimating Space for Roth Conversions

Post by ThankYouJack »

Very cool, that is perfect. Thanks!
smitcat wrote: Wed Sep 15, 2021 11:49 am
ThankYouJack wrote: Wed Sep 15, 2021 11:40 am I'm wondering the same thing, but a different scenario as I'll be looking to fill the 12% space this year.

What I plan to do is look at my paystub in December and determine my taxable W2 income for the year. I believe the only other taxable income I'll have (other than the Roth conversion) is a small amount from dividends. So I'll estimate and add the dividend amount for the year (it'll be small enough where I won't bother factoring in qualified dividends or waiting until December 22nd to get the final dividend payment). I'll then subtract $3,000 from a carry over loss, and subtract $25,100 for the standard married filing jointly deduction. The difference between that total and $81,050 should be my estimate Roth space, correct?

I'd rather be under but not a huge deal if I'm over by a bit. Seems simple enough, but let me know if you think I'm missing anything or if there's a better approach.
You likley have it all but perhaps think about these as well.
If you had any tax refunds this year....any cap gains....unemployment or other extra checks....inherited assetts/IRA's/etc.....all I can think of right now.
Thanks. How does the tax refund come into play? I'll have more carry over cap losses than gains. There may be some little things like a small amount of taxable interest from checking/saving account, a very small 1099 MISC income, but probably well under $1k.
smitcat
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Re: Estimating Space for Roth Conversions

Post by smitcat »

ThankYouJack wrote: Wed Sep 15, 2021 12:14 pm
Very cool, that is perfect. Thanks!
smitcat wrote: Wed Sep 15, 2021 11:49 am
ThankYouJack wrote: Wed Sep 15, 2021 11:40 am I'm wondering the same thing, but a different scenario as I'll be looking to fill the 12% space this year.

What I plan to do is look at my paystub in December and determine my taxable W2 income for the year. I believe the only other taxable income I'll have (other than the Roth conversion) is a small amount from dividends. So I'll estimate and add the dividend amount for the year (it'll be small enough where I won't bother factoring in qualified dividends or waiting until December 22nd to get the final dividend payment). I'll then subtract $3,000 from a carry over loss, and subtract $25,100 for the standard married filing jointly deduction. The difference between that total and $81,050 should be my estimate Roth space, correct?

I'd rather be under but not a huge deal if I'm over by a bit. Seems simple enough, but let me know if you think I'm missing anything or if there's a better approach.
You likley have it all but perhaps think about these as well.
If you had any tax refunds this year....any cap gains....unemployment or other extra checks....inherited assetts/IRA's/etc.....all I can think of right now.
Thanks. How does the tax refund come into play? I'll have more carry over cap losses than gains. There may be some little things like a small amount of taxable interest from checking/saving account, a very small 1099 MISC income, but probably well under $1k.
If you recieved a state tax refund this year (for last year's taxes) it may count towards income in the current year - please check your last years filings.
Any interest recieved for any tax refund is considered income.
'Stimulus' payments may also be taxable if you had any of them.
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Re: Estimating Space for Roth Conversions

Post by RetiredAL »

HeelaMonster wrote: Wed Sep 15, 2021 12:09 pm
mtmingus wrote: Wed Sep 15, 2021 11:47 am I use

https://www.mortgagecalculator.org/calc ... ulator.php

after all 1099% have arrived.
That would be nice. Problem is, most of those don't arrive until well into the new year... by which time the door has shut on conversions for the calendar year just past?
Most end-of-the-year investment income will have posted to your account around 12/15, so using Nov's YTD + Dec's payout, you can have a pretty accurate guess as to what the year's 1099 total will be. Also be cautious of any pay's (retirement, wages) check date

Since being $1 over a cliff is expensive, target to undershoot somewhat. With my Grand-kid's UTMA gain harvesting, I always shoot for at least $100 lower than the tax due point.

IMO, its OK strategically if you want to convert more to get conversions over and done. If you are considering this, do a conversion up towards the top of the next IRMAA bracket. What you should not do is convert to just a little above an IRMAA bracket year after year. If you are going to hit IRMAA, hit it big for one year.
ThankYouJack
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Re: Estimating Space for Roth Conversions

Post by ThankYouJack »

smitcat wrote: Wed Sep 15, 2021 12:30 pm
ThankYouJack wrote: Wed Sep 15, 2021 12:14 pm
Very cool, that is perfect. Thanks!
smitcat wrote: Wed Sep 15, 2021 11:49 am
ThankYouJack wrote: Wed Sep 15, 2021 11:40 am I'm wondering the same thing, but a different scenario as I'll be looking to fill the 12% space this year.

What I plan to do is look at my paystub in December and determine my taxable W2 income for the year. I believe the only other taxable income I'll have (other than the Roth conversion) is a small amount from dividends. So I'll estimate and add the dividend amount for the year (it'll be small enough where I won't bother factoring in qualified dividends or waiting until December 22nd to get the final dividend payment). I'll then subtract $3,000 from a carry over loss, and subtract $25,100 for the standard married filing jointly deduction. The difference between that total and $81,050 should be my estimate Roth space, correct?

I'd rather be under but not a huge deal if I'm over by a bit. Seems simple enough, but let me know if you think I'm missing anything or if there's a better approach.
You likley have it all but perhaps think about these as well.
If you had any tax refunds this year....any cap gains....unemployment or other extra checks....inherited assetts/IRA's/etc.....all I can think of right now.
Thanks. How does the tax refund come into play? I'll have more carry over cap losses than gains. There may be some little things like a small amount of taxable interest from checking/saving account, a very small 1099 MISC income, but probably well under $1k.
If you recieved a state tax refund this year (for last year's taxes) it may count towards income in the current year - please check your last years filings.
Any interest recieved for any tax refund is considered income.
'Stimulus' payments may also be taxable if you had any of them.
Got it, thanks
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Re: Estimating Space for Roth Conversions

Post by BluesH »

smitcat wrote: Wed Sep 15, 2021 12:30 pm
If you recieved a state tax refund this year (for last year's taxes) it may count towards income in the current year - please check your last years filings.
Any interest recieved for any tax refund is considered income.
'Stimulus' payments may also be taxable if you had any of them.
The general rule is that if you included last year's state income tax as an itemized deduction on your fed taxes, then this year's refund is federally taxable. If you didn't include it, or if you used the standard deduction on last year's fed taxes, then the state tax refund is not federally taxable.
Chip
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Re: Estimating Space for Roth Conversions

Post by Chip »

livesoft wrote: Wed Sep 15, 2021 4:21 am
HeelaMonster wrote: Tue Sep 14, 2021 8:45 pmGiven that (final/summary) tax info never arrives until well into the next year, can I assume you are just lifting distribution details from the transaction history for each individual fund/account?
Yes.
This only works if you have no international funds in taxable. They have foreign taxes withheld from the dividend distributions. So the amount that will appear on the 1099-DIV is the distribution you see PLUS the foreign taxes that were withheld. For the funds I own these taxes have been 8-10% of the total amount reported on the 1099.
livesoft
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Re: Estimating Space for Roth Conversions

Post by livesoft »

Chip wrote: Thu Sep 16, 2021 6:29 am
livesoft wrote: Wed Sep 15, 2021 4:21 am
HeelaMonster wrote: Tue Sep 14, 2021 8:45 pmGiven that (final/summary) tax info never arrives until well into the next year, can I assume you are just lifting distribution details from the transaction history for each individual fund/account?
Yes.
This only works if you have no international funds in taxable. They have foreign taxes withheld from the dividend distributions. So the amount that will appear on the 1099-DIV is the distribution you see PLUS the foreign taxes that were withheld. For the funds I own these taxes have been 8-10% of the total amount reported on the 1099.
Well true, one has to add back in an estimate of the foreign taxes paid. It's not like it's hard. But thanks for mentioning this. :)
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Chip
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Re: Estimating Space for Roth Conversions

Post by Chip »

livesoft wrote: Thu Sep 16, 2021 6:49 am Well true, one has to add back in an estimate of the foreign taxes paid. It's not like it's hard. But thanks for mentioning this.
I agree the addition is fairly easy. The hard part is estimating the right amount before the 1099 is received.
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Re: Estimating Space for Roth Conversions

Post by livesoft »

Chip wrote: Thu Sep 16, 2021 7:21 amI agree the addition is fairly easy. The hard part is estimating the right amount before the 1099 is received.
I know from the published history of foreign taxes for every ticker what the increase due to taxes should be. What do you do that makes it hard?
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Re: Estimating Space for Roth Conversions

Post by Chip »

livesoft wrote: Thu Sep 16, 2021 7:42 am
Chip wrote: Thu Sep 16, 2021 7:21 amI agree the addition is fairly easy. The hard part is estimating the right amount before the 1099 is received.
I know from the published history of foreign taxes for every ticker what the increase due to taxes should be. What do you do that makes it hard?
The tax rates as a percentage of the dividends varies from year to year on my funds. Don't yours?
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Re: Estimating Space for Roth Conversions

Post by livesoft »

Chip wrote: Thu Sep 16, 2021 11:53 am\The tax rates as a percentage of the dividends varies from year to year on my funds. Don't yours?
Not really so much that I have noticed.
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Leif
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Re: Estimating Space for Roth Conversions

Post by Leif »

I use the previous year's dividends and capital gains and interest for the current year. That plus other income I subtract from my target AGI. If in the current year I'm targeting a cliff type target, like the boundaries for IRMAA, I reduce my target AGI a "bit" so as not fall into that boundary. If I'm targeting a tax boundary (no cliff) then I'm willing to set it right at the boundary. Not much damage if I exceed it somewhat. This does not need to be precise.
Last edited by Leif on Sun Sep 19, 2021 11:59 am, edited 1 time in total.
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Re: Estimating Space for Roth Conversions

Post by VanGar+Goyle »

tibbitts wrote: Wed Sep 15, 2021 11:59 am
ThankYouJack wrote: Wed Sep 15, 2021 11:40 am I'd rather be under but not a huge deal if I'm over by a bit. Seems simple enough, but let me know if you think I'm missing anything or if there's a better approach.
Yes, this is really only an issue for cliffs, like with IRMAA, NIIT, or maybe ACA. For brackets, going over a little won't matter.
I see where Medicare IRMAA is a $1069 cliff, and ACA PTC used to be a cliff at 4xFPL, but not currently for 2021 or 2022.
NIIT is a 3.8% inflection point, and the second lowest income tax bracket with Long Term Capital Gains can jump from 12% to 27%.
Even the 50% - 85% Taxation of Social Security benefits is not a true cliff. Am I missing something?

Going back to the original posting, even if you know your exact income in December, the percentage of qualified dividend income for mutual funds is often only an estimate, so I leave a small margin of error. Then you can fill up your tax bracket with Roth conversions on New Year's Eve,
or Christmas Eve, but that is a Scrooge-like way to celebrate the Holiday. :happy
Well, you pay a little bit, we're a little bit tough. | You pay very much,very much tough. | You pay a too much, we're too much a tough. | How much you pay? ... Well, then we're plenty tough. - Marx
tibbitts
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Re: Estimating Space for Roth Conversions

Post by tibbitts »

VanGar+Goyle wrote: Sun Sep 19, 2021 10:05 am
tibbitts wrote: Wed Sep 15, 2021 11:59 am
ThankYouJack wrote: Wed Sep 15, 2021 11:40 am I'd rather be under but not a huge deal if I'm over by a bit. Seems simple enough, but let me know if you think I'm missing anything or if there's a better approach.
Yes, this is really only an issue for cliffs, like with IRMAA, NIIT, or maybe ACA. For brackets, going over a little won't matter.
I see where Medicare IRMAA is a $1069 cliff, and ACA PTC used to be a cliff at 4xFPL, but not currently for 2021 or 2022.
NIIT is a 3.8% inflection point, and the second lowest income tax bracket with Long Term Capital Gains can jump from 12% to 27%.
Even the 50% - 85% Taxation of Social Security benefits is not a true cliff. Am I missing something?

Going back to the original posting, even if you know your exact income in December, the percentage of qualified dividend income for mutual funds is often only an estimate, so I leave a small margin of error. Then you can fill up your tax bracket with Roth conversions on New Year's Eve,
or Christmas Eve, but that is a Scrooge-like way to celebrate the Holiday. :happy
I'd call anything like IRMAA or NIIT a cliff because the change that gets triggered applies from the first dollar, unlike something like income tax rates, where you only pay the higher percentage on amounts over a certain level. But that's just terminology.

However at least for my mutual fund accounts filling up a bracket with extreme precision the way Bogleheads would be tempted to isn't possible, because income credited on the last trading day of the year isn't visible until after the window for conversions closes on that day.
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