Large Roth conversions against conventional wisdom?

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techbud
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Large Roth conversions against conventional wisdom?

Post by techbud »

I just read a recent NYTimes article titled "The Retirement Maneuver More People Should Be Making" (paywall) by Peter Coy in which he talks about the benefits to making large (eg, $1M+) Roth conversions in a short period of time. These are in defiance of conventional wisdom which says that you should only Roth convert up to the limits of your current tax bracket.

Peter's article quotes a number of respected folks: First, Laurence Kotlikoff (BU Prof & the creator of MaxFi) and his article Optimal Roth Conversions -- Go Big or Go Home!. That article asserts "In short, federal income taxes are only part of the optimal Roth conversion story and converting only when federal income tax brackets are low — the typical practice — is rarely best and may cost you money.". The idea being, pay your taxes up front, even if they are a higher tax bracket, because over time the benefits (ex: IRMAA, avoiding SS taxes, lower RMDs) of the large Roth conversion will more than pay back the initial tax bump

He also quotes Joel Dickson of Vanguard and Steve Chen of Boldin/New Retirement who also agree with this strategy.

This surprised me as I find it hard to believe that paying taxes in a higher bracket now (going from say 24 to 32 or 35) would have a payback. What do BH'ers think?

EDIT: Although the NYTimes article I reference is paywalled, it's worth reading the free article I posted above by Kotlikoff Optimal Roth Conversions -- Go Big or Go Home!. This the basis for the NYTimes article.
Last edited by techbud on Sat Feb 01, 2025 5:53 pm, edited 1 time in total.
jebmke
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Re: Large Roth conversions against conventional wisdom?

Post by jebmke »

We were doing some Roth conversion at modest brackets until we decided that our entire assets would likely go to charity. The future tax rate on these will be zero. So I stopped entirely.

The proposal to blow it all out at once doesn't make sense to me.
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Re: Large Roth conversions against conventional wisdom?

Post by smitcat »

techbud wrote: Sat Feb 01, 2025 5:10 pm I just read a recent NYTimes article titled "The Retirement Maneuver More People Should Be Making" (paywall) by Peter Coy in which he talks about the benefits to making large (eg, $1M+) Roth conversions in a short period of time. These are in defiance of conventional wisdom which says that you should only Roth convert up to the limits of your current tax bracket.

Peter's article quotes a number of respected folks: First, Laurence Kotlikoff (BU Prof & the creator of MaxFi) and his article Optimal Roth Conversions -- Go Big or Go Home!. That article asserts "In short, federal income taxes are only part of the optimal Roth conversion story and converting only when federal income tax brackets are low — the typical practice — is rarely best and may cost you money.". The idea being, pay your taxes up front, even if they are a higher tax bracket, because over time the benefits (ex: IRMAA, avoiding SS taxes, lower RMDs) of the large Roth conversion will more than pay back the initial tax bump

He also quotes Joel Dickson of Vanguard and Steve Chen of Boldin/New Retirement who also agree with this strategy.

This surprised me as I find it hard to believe that paying taxes in a higher bracket now (going from say 24 to 32 or 35) would have a payback. What do BH'ers think?
In general it seems pretty unlikely to be correct - but why guess when there are many tools to help you figure out the best plan?
Mike Scott
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Re: Large Roth conversions against conventional wisdom?

Post by Mike Scott »

Conventional wisdom almost always has some exceptions. There may be cases where this works but I'm not likely to be one of them. Some people do put a high value on convenience so this could be one form of prepaying for future services whether it is the cheapest way or not.
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Re: Large Roth conversions against conventional wisdom?

Post by ResearchMed »

techbud wrote: Sat Feb 01, 2025 5:10 pm I just read a recent NYTimes article titled "The Retirement Maneuver More People Should Be Making" (paywall) by Peter Coy in which he talks about the benefits to making large (eg, $1M+) Roth conversions in a short period of time. These are in defiance of conventional wisdom which says that you should only Roth convert up to the limits of your current tax bracket.

Peter's article quotes a number of respected folks: First, Laurence Kotlikoff (BU Prof & the creator of MaxFi) and his article Optimal Roth Conversions -- Go Big or Go Home!. That article asserts "In short, federal income taxes are only part of the optimal Roth conversion story and converting only when federal income tax brackets are low — the typical practice — is rarely best and may cost you money.". The idea being, pay your taxes up front, even if they are a higher tax bracket, because over time the benefits (ex: IRMAA, avoiding SS taxes, lower RMDs) of the large Roth conversion will more than pay back the initial tax bump

He also quotes Joel Dickson of Vanguard and Steve Chen of Boldin/New Retirement who also agree with this strategy.

This surprised me as I find it hard to believe that paying taxes in a higher bracket now (going from say 24 to 32 or 35) would have a payback. What do BH'ers think?

Do they actually say that taking it up to, say, 35% tax bracket makes financial sense?
Or are they referring more to whether to stop with the 22% top or also covert at the 24+% rate?

Also, not everyone is affected by those "torpedoes".
For example, if one's income is going to be higher than the cut-off where 85% of SS income likely will be taxed no matter what, then that's not part of the comparison.
And then also compare what the actual IRMAA cost would be along with a high tax bracket, and which affects the total tax more, etc.

This may be another case of: "It depends."
"Go Big or Go Home" may sound nice, and it may be wise advice for some (or not), but it may not be good advice for "everyone".

RM
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Re: Large Roth conversions against conventional wisdom?

Post by PSM »

A large conversion could work as a gamble and/or insurance:

A gamble that the very long term investments in the Roth account will surpass the downside of paying so much tax early

Insurance for a couple whereby the early death of one spouse would propel the surviving into very long term higher tax rates as a single

I have no calculations to back up my gut level reaction…
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Re: Large Roth conversions against conventional wisdom?

Post by steadyosmosis »

No way I am doing that.
I agree with jebmke (except I do fill my 0% bracket, and sometimes go into the 10% bracket).
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techbud
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Re: Large Roth conversions against conventional wisdom?

Post by techbud »

ResearchMed wrote: Sat Feb 01, 2025 5:37 pm Do they actually say that taking it up to, say, 35% tax bracket makes financial sense?
Or are they referring more to whether to stop with the 22% top or also covert at the 24+% rate?
Yes, the NYTimes article specifically says it can make sense to convert even if jumping to a 24%, 32%, or even 35%. (Sorry I don't think I'm allowed to quote it directly as it's paywalled and I want to respect copyright.)
The Kotlikoff article similarly says "federal income taxes are only part of the optimal Roth conversion story and converting only when federal income tax brackets are low — the typical practice — is rarely best and may cost you money." However, that article talks much less about brackets and instead mostly talks about total taxes paid & savings potential. It does assert that MaxFi planner will calculate this for you and will frequently suggest the "go big" strategy.
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Watty
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Re: Large Roth conversions against conventional wisdom?

Post by Watty »

techbud wrote: Sat Feb 01, 2025 5:10 pm These are in defiance of conventional wisdom which says that you should only Roth convert up to the limits of your current tax bracket.
Two broad reasons that you might want to do Roth conversions;

1) Retirement planning.

2) Estate planning.

I have never needed to worry about it but that conventional wisdom you were referring to may only apply during your lifetime and with the complicated estate tax laws I can envision situations where doing Roth conversions in a high tax bracket might make sense.
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Re: Large Roth conversions against conventional wisdom?

Post by CAsage »

If I had converted my whole IRA in March 2020, and paid 32% or more... it would have doubled by now and I would be way ahead. Hindsight. However.... it's tough to plan that. Since we are now getting bit by IRMAA.... hmmm..... more thinking....
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ResearchMed
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Re: Large Roth conversions against conventional wisdom?

Post by ResearchMed »

techbud wrote: Sat Feb 01, 2025 6:03 pm
ResearchMed wrote: Sat Feb 01, 2025 5:37 pm Do they actually say that taking it up to, say, 35% tax bracket makes financial sense?
Or are they referring more to whether to stop with the 22% top or also covert at the 24+% rate?
Yes, the NYTimes article specifically says it can make sense to convert even if jumping to a 24%, 32%, or even 35%. (Sorry I don't think I'm allowed to quote it directly as it's paywalled and I want to respect copyright.)
The Kotlikoff article similarly says "federal income taxes are only part of the optimal Roth conversion story and converting only when federal income tax brackets are low — the typical practice — is rarely best and may cost you money." However, that article talks much less about brackets and instead mostly talks about total taxes paid & savings potential. It does assert that MaxFi planner will calculate this for you and will frequently suggest the "go big" strategy.

Sorry... did they say that someone who would otherwise pretty much remain in the 22-25% or less bracket should take a large amount out and pay 10+% more? Plus the extra IRMAA? And perhaps extra NIIT?

And of course, there's always the problem of not knowing what will be happening. In retrospect, "the other way" could end up looking better.
It often does, because one can pick and choose "which restrospective" to compare to "what really happened"! :wink:

You are allowed to provide short direct quotes (but in quotation marks, of course, and with attribution) to convey a key issue. What's not allowed is copying long sections.

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Re: Large Roth conversions against conventional wisdom?

Post by techbud »

ResearchMed wrote: Sat Feb 01, 2025 6:15 pm
techbud wrote: Sat Feb 01, 2025 6:03 pm
Yes, the NYTimes article specifically says it can make sense to convert even if jumping to a 24%, 32%, or even 35%. (Sorry I don't think I'm allowed to quote it directly as it's paywalled and I want to respect copyright.)
The Kotlikoff article similarly says "federal income taxes are only part of the optimal Roth conversion story and converting only when federal income tax brackets are low — the typical practice — is rarely best and may cost you money." However, that article talks much less about brackets and instead mostly talks about total taxes paid & savings potential. It does assert that MaxFi planner will calculate this for you and will frequently suggest the "go big" strategy.

Sorry... did they say that someone who would otherwise pretty much remain in the 22-25% or less bracket should take a large amount out and pay 10+% more? Plus the extra IRMAA? And perhaps extra NIIT?

And of course, there's always the problem of not knowing what will be happening. In retrospect, "the other way" could end up looking better.
It often does, because one can pick and choose "which restrospective" to compare to "what really happened"! :wink:

You are allowed to provide short direct quotes (but in quotation marks, of course, and with attribution) to convey a key issue. What's not allowed is copying long sections.

RM
Here's an abbreviated quote from the NYTimes article answering your question:
"The pain of a Roth conversion comes when the government demands its cut up front. [...] The maneuver may push you into a higher tax bracket — say from 22 percent to 24 percent, 32 percent, or even 35 percent.

Ouch. In financial planning, conventional wisdom says you should usually put off paying taxes as long as possible, and that you should even out your annual income so there’s never a year when you get pushed into a higher tax bracket. That would sometimes suggest stretching out a conversion to a Roth over many years or not doing it at all. That’s the answer you might get from a free online calculator, of which there are many.

In reality, though, the best move for a lot of people is to take the tax hit and convert a lot of money quickly, says Laurence Kotlikoff, an economics professor at Boston University. “Go big or go home may be your best strategy,” he wrote in his newsletter Economic Matters in November."
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Re: Large Roth conversions against conventional wisdom?

Post by ResearchMed »

techbud wrote: Sat Feb 01, 2025 6:22 pm
ResearchMed wrote: Sat Feb 01, 2025 6:15 pm


Sorry... did they say that someone who would otherwise pretty much remain in the 22-25% or less bracket should take a large amount out and pay 10+% more? Plus the extra IRMAA? And perhaps extra NIIT?

And of course, there's always the problem of not knowing what will be happening. In retrospect, "the other way" could end up looking better.
It often does, because one can pick and choose "which restrospective" to compare to "what really happened"! :wink:

You are allowed to provide short direct quotes (but in quotation marks, of course, and with attribution) to convey a key issue. What's not allowed is copying long sections.

RM
Here's an abbreviated quote from the NYTimes article answering your question:
"The pain of a Roth conversion comes when the government demands its cut up front. [...] The maneuver may push you into a higher tax bracket — say from 22 percent to 24 percent, 32 percent, or even 35 percent.

Ouch. In financial planning, conventional wisdom says you should usually put off paying taxes as long as possible, and that you should even out your annual income so there’s never a year when you get pushed into a higher tax bracket. That would sometimes suggest stretching out a conversion to a Roth over many years or not doing it at all. That’s the answer you might get from a free online calculator, of which there are many.

In reality, though, the best move for a lot of people is to take the tax hit and convert a lot of money quickly, says Laurence Kotlikoff, an economics professor at Boston University. “Go big or go home may be your best strategy,” he wrote in his newsletter Economic Matters in November."

Wow.

The next to last paragraph includes that an online calculator *might* show that it would be prudent to stretch it out (or even "not doing it at all" - not doing what "at all"? stretching? planning? er, paying taxes!? :wink: ).

The next paragraph includes that the best move might be *not* to stretch and to take that hit up front by going "big".

How about: "It depends"? And perhaps to *use* a calculator (or perhaps a tax advisor) if one is interested in trying to optimize, and make a decision?

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steadyosmosis
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Re: Large Roth conversions against conventional wisdom?

Post by steadyosmosis »

techbud wrote: Sat Feb 01, 2025 6:22 pm Here's an abbreviated quote from the NYTimes article answering your question:
"The pain of a Roth conversion comes when the government demands its cut up front. [...] The maneuver may push you into a higher tax bracket — say from 22 percent to 24 percent, 32 percent, or even 35 percent.

Ouch. In financial planning, conventional wisdom says you should usually put off paying taxes as long as possible, and that you should even out your annual income so there’s never a year when you get pushed into a higher tax bracket. That would sometimes suggest stretching out a conversion to a Roth over many years or not doing it at all. That’s the answer you might get from a free online calculator, of which there are many.

In reality, though, the best move for a lot of people is to take the tax hit and convert a lot of money quickly, says Laurence Kotlikoff, an economics professor at Boston University. “Go big or go home may be your best strategy,” he wrote in his newsletter Economic Matters in November."
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Re: Large Roth conversions against conventional wisdom?

Post by JazzTime »

I have not yet read the article, but I bookmarked it for later reading.

I've been making fairly large conversions over the past several years. The problem I faced is having a very large IRA that would continue to grow ever larger and drive very large and continuing RMD's. Each person can decide for him/herself whether the conversions make sense. The other problem I face is that pension plus SS plus Divs plus LTCG's plus RMD's plus Roth conversions results in a very high tax burden. Then there is also Miss IRMAA to deal with. In spite of the tax burden and my relationship with Miss IRMAA, I am comfortable now having a very large and growing Roth account, although the IRA still continues to grow, albeit not as much.

From an estate perspective, the Roth conversions have reduced my total estate as a result of the added taxes paid from my taxable account. The Roth account ultimately will go to my wife and son, who will enjoy tax-free wealth. That's my preferred objective.

I don't think there is a right or wrong answer. It just depends on your individual circumstances, what you are trying to achieve, and your comfort level. I also think you could drive yourself crazy trying to make a mathematically precise calculation that could easily be subverted by a longer or shorter life span or by a change in Fed/State tax policy.
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Re: Large Roth conversions against conventional wisdom?

Post by chw »

techbud wrote: Sat Feb 01, 2025 5:10 pm I just read a recent NYTimes article titled "The Retirement Maneuver More People Should Be Making" (paywall) by Peter Coy in which he talks about the benefits to making large (eg, $1M+) Roth conversions in a short period of time. These are in defiance of conventional wisdom which says that you should only Roth convert up to the limits of your current tax bracket.

Peter's article quotes a number of respected folks: First, Laurence Kotlikoff (BU Prof & the creator of MaxFi) and his article Optimal Roth Conversions -- Go Big or Go Home!. That article asserts "In short, federal income taxes are only part of the optimal Roth conversion story and converting only when federal income tax brackets are low — the typical practice — is rarely best and may cost you money.". The idea being, pay your taxes up front, even if they are a higher tax bracket, because over time the benefits (ex: IRMAA, avoiding SS taxes, lower RMDs) of the large Roth conversion will more than pay back the initial tax bump

He also quotes Joel Dickson of Vanguard and Steve Chen of Boldin/New Retirement who also agree with this strategy.

This surprised me as I find it hard to believe that paying taxes in a higher bracket now (going from say 24 to 32 or 35) would have a payback. What do BH'ers think?

EDIT: Although the NYTimes article I reference is paywalled, it's worth reading the free article I posted above by Kotlikoff Optimal Roth Conversions -- Go Big or Go Home!. This the basis for the NYTimes article.
I think if one is investing the converted amounts in equities (vs. fixed income), perhaps the case can be made that converting a huge sum makes sense. In my case the majority of my fixed income allocation is held in traditional IRA accounts, and if converted to a Roth, would mostly continue to be invested that way. The slower growth of a fixed income asset may counteract the effect of a large one or two time conversion.
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Re: Large Roth conversions against conventional wisdom?

Post by smitcat »

techbud wrote: Sat Feb 01, 2025 6:03 pm
ResearchMed wrote: Sat Feb 01, 2025 5:37 pm Do they actually say that taking it up to, say, 35% tax bracket makes financial sense?
Or are they referring more to whether to stop with the 22% top or also covert at the 24+% rate?
Yes, the NYTimes article specifically says it can make sense to convert even if jumping to a 24%, 32%, or even 35%. (Sorry I don't think I'm allowed to quote it directly as it's paywalled and I want to respect copyright.)
The Kotlikoff article similarly says "federal income taxes are only part of the optimal Roth conversion story and converting only when federal income tax brackets are low — the typical practice — is rarely best and may cost you money." However, that article talks much less about brackets and instead mostly talks about total taxes paid & savings potential. It does assert that MaxFi planner will calculate this for you and will frequently suggest the "go big" strategy.
As a basic premise taxes paid is not the correct metric to use.
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Re: Large Roth conversions against conventional wisdom?

Post by techbud »

smitcat wrote: Sat Feb 01, 2025 7:17 pm
techbud wrote: Sat Feb 01, 2025 6:03 pm
Yes, the NYTimes article specifically says it can make sense to convert even if jumping to a 24%, 32%, or even 35%. (Sorry I don't think I'm allowed to quote it directly as it's paywalled and I want to respect copyright.)
The Kotlikoff article similarly says "federal income taxes are only part of the optimal Roth conversion story and converting only when federal income tax brackets are low — the typical practice — is rarely best and may cost you money." However, that article talks much less about brackets and instead mostly talks about total taxes paid & savings potential. It does assert that MaxFi planner will calculate this for you and will frequently suggest the "go big" strategy.
As a basic premise taxes paid is not the correct metric to use.
It’s not saying that. Please read at least the Kotlikoff article.
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Re: Large Roth conversions against conventional wisdom?

Post by smitcat »

techbud wrote: Sat Feb 01, 2025 7:34 pm
smitcat wrote: Sat Feb 01, 2025 7:17 pm

As a basic premise taxes paid is not the correct metric to use.
It’s not saying that. Please read at least the Kotlikoff article.
I was responding to the exact wording in your post - not reading behind pay walls.
More importantly why guess when there exists tools for calculating the results?
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Re: Large Roth conversions against conventional wisdom?

Post by techbud »

smitcat wrote: Sat Feb 01, 2025 7:38 pm
techbud wrote: Sat Feb 01, 2025 7:34 pm
It’s not saying that. Please read at least the Kotlikoff article.
I was responding to the exact wording in your post - not reading behind pay walls.
More importantly why guess when there exists tools for calculating the results?
Please re-read my opening post.
The Kotlikoff article is free and not behind a paywall as I clearly stated.
Also, re “the exact wording of your post “, I did not say that. Here’s what I wrote in the original post, key word bolded:
This surprised me as I find it hard to believe that paying taxes in a higher bracket now (going from say 24 to 32 or 35) would have a payback. What do BH'ers think
I never said “taxes paid were the metric” ; I said “payback” eg total return.
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Re: Large Roth conversions against conventional wisdom?

Post by N.Y.Cab »

I'm all for moderation. Converting into 24% marginal rate plus some NIIT, our effective rate is still around 15%. This seems reasonable while working and not yet affected by IRMAA.
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Re: Large Roth conversions against conventional wisdom?

Post by tibbitts »

N.Y.Cab wrote: Sat Feb 01, 2025 9:08 pm I'm all for moderation. Converting into 24% marginal rate plus some NIIT, our effective rate is still around 15%. This seems reasonable while working and not yet affected by IRMAA.
You can't say that's applicable to everyone, since for some people converting to 35% marginal would be "moderation" and for others converting to 15% marginal would be "moderation." And IRMAA might come down to always being in at least one of the mid-tiers even with large-ish conversions.
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Re: Large Roth conversions against conventional wisdom?

Post by tibbitts »

techbud wrote: Sat Feb 01, 2025 5:10 pm This surprised me as I find it hard to believe that paying taxes in a higher bracket now (going from say 24 to 32 or 35) would have a payback. What do BH'ers think?
I think the actual results of converting at a higher bracket now will depend mostly on how returns - and tax policy, and various aspects of your life - play out in the future.
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Re: Large Roth conversions against conventional wisdom?

Post by bsteiner »

Each case is different. Not everyone should do large conversions. Some people shouldn't do any conversions. However, many people don't understand the benefits of Roth convesions. They're underused rather than overused.

Probably the largest benefit of the Roth conversion for those who have other money with which to pay the tax on the conversion is that by paying the tax on the conversion out of other assets, you're effectively making a substantial additional contribution to the IRA.

Probably the next largest benefit is that there are no RMDs from a Roth during lifetime.

There's a large benefit for IRA owners in states that have a state estate tax. The income tax deduction for the estate tax on a traditional IRA only covers the Federal, but not the state, estate tax. By converting, you remove the income tax from your estate, thus avoiding that problem.

If you provide for your children in trust rather than outright, as almost all of our clients do, you avoid the tradeoff between making distributions to save income tax at the cost of giving up asset protection, and retaining the IRA benefits in trust at the cost of paying additional income tax.

The tax rate play is often a bonus.
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Re: Large Roth conversions against conventional wisdom?

Post by Svensk Anga »

Murphys law suggests that if you go big, the government will implement a value added tax while cutting income tax rates. Risk control leads me to keep it to a reasonable bracket.
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Re: Large Roth conversions against conventional wisdom?

Post by tibbitts »

Svensk Anga wrote: Sat Feb 01, 2025 10:31 pm Murphys law suggests that if you go big, the government will implement a value added tax while cutting income tax rates. Risk control leads me to keep it to a reasonable bracket.
There are risks in both directions. You could convert and the future earnings on the funds you convert turn out to be so low that you could have converted smaller amounts over many more years, or even not at all. Or, you could not convert and the value of your deferred accounts could grow so much that you'll have a much bigger future tax problem and less time and fewer conversion opportunities to fix that before SS/RMDs, etc.
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Re: Large Roth conversions against conventional wisdom?

Post by rob »

IMO it's a bad idea to completely bet on future tax issues in any direction - the Id-10_T's in politics can always out dumb the smartest investor... It' about balance. Do smaller conversions to a reasonable level to have a balance and be partly right and partly wrong.
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Re: Large Roth conversions against conventional wisdom?

Post by smitcat »

techbud wrote: Sat Feb 01, 2025 7:48 pm
smitcat wrote: Sat Feb 01, 2025 7:38 pm

I was responding to the exact wording in your post - not reading behind pay walls.
More importantly why guess when there exists tools for calculating the results?
Please re-read my opening post.
The Kotlikoff article is free and not behind a paywall as I clearly stated.
Also, re “the exact wording of your post “, I did not say that. Here’s what I wrote in the original post, key word bolded:
This surprised me as I find it hard to believe that paying taxes in a higher bracket now (going from say 24 to 32 or 35) would have a payback. What do BH'ers think
I never said “taxes paid were the metric” ; I said “payback” eg total return.
More importantly why guess when there exists tools for calculating the results?
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Re: Large Roth conversions against conventional wisdom?

Post by smitcat »

N.Y.Cab wrote: Sat Feb 01, 2025 9:08 pm I'm all for moderation. Converting into 24% marginal rate plus some NIIT, our effective rate is still around 15%. This seems reasonable while working and not yet affected by IRMAA.
Effective rate is not what you are comparing when analyzing potential Roth conversions.
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Re: Large Roth conversions against conventional wisdom?

Post by heyyou »

CAsage wrote: Sat Feb 01, 2025 6:10 pm If I had converted my whole IRA in March 2020, and paid 32% or more... it would have doubled by now and I would be way ahead.
For doubters, if your tIRA is sizable, its small annual bond-based percentage growth will still boost its size from early retirement into the next few decades. In your old age, you will be taxed on that noticeably higher amount at a rising RMD rate.

As an age 55 retiree, I was only converting about 9000 per year, to the top of my then current tax bracket. Now as a mid-70s widower with RMDs for the rest of my life, I wish that we had converted far more in those early retirement years. I did not ever consider the compounded dollar amount of the future growth in my tIRA, I was just looking at the small bond-rate percentage of the growth, twenty years ago. The size of the tIRA may have nearly doubled since then, due to dividends, compounding, and a dearth of taxable withdrawals.

Now I have the steady dilemma of paying higher current tax or paying higher future tax, on money that I don't need for current spending. Yes, it is a first-world aggravation. Now (15-20 years later), I agree with paying more, extra tax, early (larger Roth conversions) to (1) get the money into higher growth funds and (2) stored in a tax sheltered account.
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Re: Large Roth conversions against conventional wisdom?

Post by lereh »

paying the income taxes out of other taxable funds instead of the traditional IRA, increases your net after tax balance in tax advantaged accounts. It also increases your net after tax balances that enjoy asset protection.

lastly, this is crazy, but it’s my thing, nn RMD‘s. No worrying about whether you took them, and what time of the year you take them, and whether or not you still had one due when you pass away and now your heirs have to deal with it, and making sure that your vendor calculates it correctly yada yada yada yada.
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Re: Large Roth conversions against conventional wisdom?

Post by lereh »

One calculator I used had a Roth conversion breaking even even if tax rates were to drop 10 percentage points, this was for an all bond portfolio and a 20 year planning horizon. This is with paying the income tax out of bonds in a taxable account.

I was astounded by the results, but the math checks out.
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Re: Large Roth conversions against conventional wisdom?

Post by Diluted Waters »

techbud wrote: Sat Feb 01, 2025 6:03 pm
ResearchMed wrote: Sat Feb 01, 2025 5:37 pm Do they actually say that taking it up to, say, 35% tax bracket makes financial sense?
Or are they referring more to whether to stop with the 22% top or also covert at the 24+% rate?
Yes, the NYTimes article ... (Sorry I don't think I'm allowed to quote it directly as it's paywalled and I want to respect copyright.)
To quote Google's AI: "Quoting or reproducing small amounts of an author's or artist's work in order to review or criticize it or to illustrate the user's own argument is considered fair use."
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Re: Large Roth conversions against conventional wisdom?

Post by tibbitts »

heyyou wrote: Sun Feb 02, 2025 2:09 pm
CAsage wrote: Sat Feb 01, 2025 6:10 pm If I had converted my whole IRA in March 2020, and paid 32% or more... it would have doubled by now and I would be way ahead.
For doubters, if your tIRA is sizable, its small annual bond-based percentage growth will still boost its size from early retirement into the next few decades. In your old age, you will be taxed on that noticeably higher amount at a rising RMD rate.

As an age 55 retiree, I was only converting about 9000 per year, to the top of my then current tax bracket. Now as a mid-70s widower with RMDs for the rest of my life, I wish that we had converted far more in those early retirement years. I did not ever consider the compounded dollar amount of the future growth in my tIRA, I was just looking at the small bond-rate percentage of the growth, twenty years ago. The size of the tIRA may have nearly doubled since then, due to dividends, compounding, and a dearth of taxable withdrawals.

Now I have the steady dilemma of paying higher current tax or paying higher future tax, on money that I don't need for current spending. Yes, it is a first-world aggravation. Now (15-20 years later), I agree with paying more, extra tax, early (larger Roth conversions) to (1) get the money into higher growth funds and (2) stored in a tax sheltered account.
For me, the issue was that with a very high percentage of total assets in deferred, deferred had to by necessity include a lot of equity (even at, for example 50/50 overall.) Converting has removed virtually all equity - along with the "risk" of high equity returns, although that risk hasn't shown up for years now - from my deferred accounts. But that's not exactly the same as the "get[ting] the money into higher growth funds" you mentioned. Moving equity from deferred to Roth can have the effect of increasing your effective allocation to equity "automatically", depending partly on how you pay taxes on the conversions, without making any other changes. In my case I paid a chunk of conversion taxes by removing equity from taxable, but almost nobody would want to simply convert fixed income in deferred to equity in Roth, which it sounded like you were describing.

It's important to use real and not nominal returns in looking at RMDs. Sometimes I think people put 6-7% into an RMD calculator and panic, but that can seriously overstate the problem. NIIT is an exception, admittedly, but in general real returns are what matter.
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teen persuasion
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Re: Large Roth conversions against conventional wisdom?

Post by teen persuasion »

Ok, I read the Kotlikoff article.

If conventional wisdom is using brackets as the yardstick, then conventional wisdom is wrong. Marginal tax rates are the proper yardstick. Marginal tax rates sometimes, perhaps often, bear little resemblance to tax brackets, especially when we start lumping in IRMAA, NIIT, SS taxation, ACA subsidies, state taxes, etc.

The Kotlikoff article spent some time talking about how "optimal Roth conversions is a simultaneous equations problem with non differentiable, discontinuous, and non-convex constraints," but never actually mentioned the resulting marginal rates.

Conventional wisdom using tax brackets would have had us contributing everything to Roth in essentially the zero bracket (10-12% bracket, but enough non refundable and partially/wholly refundable to result in zero tax owed and some tax refund). Looking at our marginal tax rate approaching 50% due to phaseout of refundable credits and including state tax rates, it was clear we should contribute to employer tax deferred accounts to capture as much in refundable credits as possible on top of reducing tax owed to zero with reduced AGI. Those increased refunds could then be used to fund Roth IRAs with no tax cost, and significantly increased our total saved - the Roth portion of our investments is fully 40% of the total.

The increased total meant DH could retire earlier, leaving more years to complete Roth conversions before taking SS, when the Roth conversion income would make more SS income taxable, thus again increasing our marginal rate significantly above our nominal tax bracket. Spreading the total converted over more years means smaller conversions each year, and more of each year's smaller conversion fits in the zero bracket (standard deduction) and 10% bracket, instead of spilling into the 12% or higher brackets if a few large conversions were done.

I believe we can keep our desired taxes level at a conversion amount that would also completely escape state taxes, and that same AGI should be in Essential Plan range for zero premium health insurance until Medicare.
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Re: Large Roth conversions against conventional wisdom?

Post by Epsilon Delta »

teen persuasion wrote: Sun Feb 02, 2025 4:22 pm The Kotlikoff article spent some time talking about how "optimal Roth conversions is a simultaneous equations problem with non differentiable, discontinuous, and non-convex constraints," but never actually mentioned the resulting marginal rates.
Well, that's good because marginal rates are a partial derivative, so don't exist to the extent the problem is non-differentiable.

In practice the problem is more or less piecewise differentiable. Which means you find a bunch of local optimums and then pick the best one. Sometimes some of the local optima are hard to find, so imagination is useful.
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Re: Large Roth conversions against conventional wisdom?

Post by BreadandButter »

According to the Substack article, the Kotlikoff analysis maximizes spending over your lifetime, while conventional Roth conversion analyses maximize the legacy estate after a lifetime of a spending at some preferred level. The first type of analysis may be best for a single person with no heirs, but many married people with children want to live a comfortable lifestyle that does not necessarily use up their entire resources by the time of their death, preferring to leave something to their heirs. These 2 different preferences will lead to 2 different optimal Roth conversion plans.
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Re: Large Roth conversions against conventional wisdom?

Post by 123 »

A large Roth conversion does not make sense in every scenario. It's possible a large one-shot conversion could make sense if doing so does not materially impact the size of your taxable account (and taxes for Roth conversions should always be paid out of separate taxable funds to maximize the value of the conversion). So maybe it makes sense to do a Roth conversion that generates $1M in taxes if you've got $10M in taxable accounts to pay it. But I haven't done the math.
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Re: Large Roth conversions against conventional wisdom?

Post by JazzTime »

bsteiner wrote: Sat Feb 01, 2025 10:05 pm Each case is different. Not everyone should do large conversions. Some people shouldn't do any conversions. However, many people don't understand the benefits of Roth convesions. They're underused rather than overused.

Probably the largest benefit of the Roth conversion for those who have other money with which to pay the tax on the conversion is that by paying the tax on the conversion out of other assets, you're effectively making a substantial additional contribution to the [Roth] IRA.

Probably the next largest benefit is that there are no RMDs from a Roth during lifetime.

There's a large benefit for IRA owners in states that have a state estate tax. The income tax deduction for the estate tax on a traditional IRA only covers the Federal, but not the state, estate tax. By converting, you remove the income tax from your estate, thus avoiding that problem.

If you provide for your children in trust rather than outright, as almost all of our clients do, you avoid the tradeoff between making distributions to save income tax at the cost of giving up asset protection, and retaining the IRA benefits in trust at the cost of paying additional income tax.

The tax rate play is often a bonus.
Exactomundo.

As to the state estate tax, by paying the tax on the conversion, you reduce the size of your taxable estate.
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techbud
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Re: Large Roth conversions against conventional wisdom?

Post by techbud »

I found another Kotlikoff article where he goes into more detail. https://larrykotlikoff.substack.com/p/w ... onversions
Some interesting quotes:
I’ve now run MaxiFi’s Roth Conversion Optimizer for enough households, including my own, to clearly state that equalizing tax brackets is definitely not what the problem calls for. In my own and my wife’s optimal conversion plan, our marginal tax starts at 37 percent and declines, over the years, to 10 percent.

I was quite surprised that the program was suggesting any Roth conversions for us, let alone that we convert over half of our tax-deferred assets in the near term. After incorporating its recommendations in a new profile, I made yet another profile where I modified the conversion recommendations in various ways — all to see if doing less or more conversion and changing the timing would produce a better outcome — higher lifetime spending. I found nothing that beat the Optimizer’s conversion recommendations. I wasn’t surprised. I’d tried beating the Optimizer manually for many other households — also with no success.

The other surprise is how much tax savings the Optimizer generated — close to $150K! I’m not a spring chicken. But I’m still decades away from my assumed maximum age of life — 100. (My mom passed at 98.) Also, my wife is younger by eight years. Hence, the non-linear positive impact of enjoying many years of gain at the smaller cost of relatively few years of pain holds even for people getting old enough to be President.
[...]
PS, Getting Roth conversions right is important. MaxiFi generates very precise annual conversion schedules. It you deviate dramatically from the tool’s recommended lifetime total conversion amount and its recommended age-pattern — and you can run the program including such deviations to check what I’m saying, you’ll surely dramatically lower your lifetime tax savings from Roth conversions. Indeed, you can easily end up raising your lifetime taxes.

In this regard, I encourage households who have come up with a given Roth conversion plan — maybe one based on some method of bracket equalization — to use MaxiFi and enter their plan manually in a separate profile. Then compare it with a profile with no conversions and the one with MaxiFi’s recommended conversions.
Like most of you, I'm skeptical of converting a huge chunk up front. Clearly MaxFi is using different algorithms & making different assumptions than every other planner (and Kotlikoff is shouting this from the rooftop!). The million dollar question is, do you trust that they are right and everyone else is wrong?
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Re: Large Roth conversions against conventional wisdom?

Post by bikefish »

I used the new retirement software during a trial period. It recommended me making large Roth Conversion for a 4 year period. I am a little hesitant to pull the trigger on such large conversions. Got me thinking though which is a good thing.
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Re: Large Roth conversions against conventional wisdom?

Post by Buzzman »

I follow Kotlikoff on Substack, and my impression is that he is primarily promoting MaxiFi Planner. In a previously linked article, he explicitly states, ”…my company recently rolled out MaxiFi Planner’s fully integrated Roth Conversion Optimizer…” In other words, his argument boils down to: buy the software, run the numbers, and you’ll see for yourself.

For what it’s worth, I did a quick spreadsheet analysis and found no clear advantage in executing one large Roth conversion.

My Perspective on Roth Conversion Tools

In general, I find Roth conversion software tools to be of limited value. I’ve used Boldin and Pralana, had advisors run RightCapital, and even built my own spreadsheets. I’m not suggesting that any of these tools produce incorrect math; rather, their results often lack intuitive clarity. More importantly, they all share the same fundamental weaknesses:
1. Assumptions about future tax laws
2. Expected future return rates
3. The timeframe and parameters being optimized

Ultimately, choosing to do a Roth conversion is a calculated bet—an attempt to determine whether paying taxes now will leave you better off than paying them later. The size of that bet depends on the size of your tax-deferred account (TDA). Someone with a $500K TDA is making a much smaller bet than someone with a $5M TDA. And what exactly are you betting on? Primarily, future tax liabilities—either for yourself or your heirs.

Paying taxes upfront to reduce a future tax burden for heirs means placing two bets:
1. On your own financial future (income, tax rates, personal situation, etc.).
2. On your heirs’ future circumstances (their income, tax brackets, and personal needs).

If your goal is to prepay taxes for the benefit of your heirs, that’s great—but I view that more as a gifting strategy than a true tax optimization plan. And for that, I’m not sure you need specialized software to make the decision.
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Re: Large Roth conversions against conventional wisdom?

Post by smitcat »

Buzzman wrote: Tue Feb 04, 2025 12:42 pm I follow Kotlikoff on Substack, and my impression is that he is primarily promoting MaxiFi Planner. In a previously linked article, he explicitly states, ”…my company recently rolled out MaxiFi Planner’s fully integrated Roth Conversion Optimizer…” In other words, his argument boils down to: buy the software, run the numbers, and you’ll see for yourself.

For what it’s worth, I did a quick spreadsheet analysis and found no clear advantage in executing one large Roth conversion.

My Perspective on Roth Conversion Tools

In general, I find Roth conversion software tools to be of limited value. I’ve used Boldin and Pralana, had advisors run RightCapital, and even built my own spreadsheets. I’m not suggesting that any of these tools produce incorrect math; rather, their results often lack intuitive clarity. More importantly, they all share the same fundamental weaknesses:
1. Assumptions about future tax laws
2. Expected future return rates
3. The timeframe and parameters being optimized

Ultimately, choosing to do a Roth conversion is a calculated bet—an attempt to determine whether paying taxes now will leave you better off than paying them later. The size of that bet depends on the size of your tax-deferred account (TDA). Someone with a $500K TDA is making a much smaller bet than someone with a $5M TDA. And what exactly are you betting on? Primarily, future tax liabilities—either for yourself or your heirs.

Paying taxes upfront to reduce a future tax burden for heirs means placing two bets:
1. On your own financial future (income, tax rates, personal situation, etc.).
2. On your heirs’ future circumstances (their income, tax brackets, and personal needs).

If your goal is to prepay taxes for the benefit of your heirs, that’s great—but I view that more as a gifting strategy than a true tax optimization plan. And for that, I’m not sure you need specialized software to make the decision.
This statement for heirs....
"If your goal is to prepay taxes for the benefit of your heirs, that’s great—but I view that more as a gifting strategy than a true tax optimization plan. And for that, I’m not sure you need specialized software to make the decision."
We have found that Pralana will allow you to run scenarios with and without Roth conversions (or to some level) and review the ending balances which will tell you if there are benifits for heirs and to what extent.

And these general issues.....
"1. Assumptions about future tax laws
2. Expected future return rates
3. The timeframe and parameters being optimized"
You can run the models with any variables of these that you desire. Record the results and use that data for your future choice(s). I believe you did miss a few variables which will affect the results.
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Re: Large Roth conversions against conventional wisdom?

Post by Buzzman »

smitcat wrote: Tue Feb 04, 2025 3:19 pm You can run the models with any variables of these that you desire. Record the results and use that data for your future choice(s). I believe you did miss a few variables which will affect the results.
smitcat, I know you are a fan of these models but I'm skeptical. I've done what you say. Varied inputs and recorded outputs and got suspect results.

I'm sure I missed a bunch of variables. It's also not easy to know what all the random variables and their dependencies are. Are bond yields and inflation correlated? Probably. What about equity returns and inflation? Maybe. What about market volatility? Personally, I have a problem including any historical market data before there were telephones. Then there are all the underlying rules which change...Tax rates, tax laws, Roth rules, RMD rules, and more. The hardest part is in building the applicable data set, defining the underlying assumptions and then generating some kind of distribution and heuristics for their use. The math after that is the easy part.

In my opinion, (and it's just my opinion) the uncertainties in all of the inputs (data sets, taxes, rules and criteria) far outweigh any computational precision in the models.
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Re: Large Roth conversions against conventional wisdom?

Post by PharmerBrown »

CAsage wrote: Sat Feb 01, 2025 6:10 pm If I had converted my whole IRA in March 2020, and paid 32% or more... it would have doubled by now and I would be way ahead. Hindsight. However.... it's tough to plan that. Since we are now getting bit by IRMAA.... hmmm..... more thinking....
Ahead of what??
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Re: Large Roth conversions against conventional wisdom?

Post by PharmerBrown »

techbud wrote: Tue Feb 04, 2025 8:15 am I found another Kotlikoff article where he goes into more detail. https://larrykotlikoff.substack.com/p/w ... onversions
Some interesting quotes:
I’ve now run MaxiFi’s Roth Conversion Optimizer for enough households, including my own, to clearly state that equalizing tax brackets is definitely not what the problem calls for. In my own and my wife’s optimal conversion plan, our marginal tax starts at 37 percent and declines, over the years, to 10 percent.

I was quite surprised that the program was suggesting any Roth conversions for us, let alone that we convert over half of our tax-deferred assets in the near term. After incorporating its recommendations in a new profile, I made yet another profile where I modified the conversion recommendations in various ways — all to see if doing less or more conversion and changing the timing would produce a better outcome — higher lifetime spending. I found nothing that beat the Optimizer’s conversion recommendations. I wasn’t surprised. I’d tried beating the Optimizer manually for many other households — also with no success.

The other surprise is how much tax savings the Optimizer generated — close to $150K! I’m not a spring chicken. But I’m still decades away from my assumed maximum age of life — 100. (My mom passed at 98.) Also, my wife is younger by eight years. Hence, the non-linear positive impact of enjoying many years of gain at the smaller cost of relatively few years of pain holds even for people getting old enough to be President.
[...]
PS, Getting Roth conversions right is important. MaxiFi generates very precise annual conversion schedules. It you deviate dramatically from the tool’s recommended lifetime total conversion amount and its recommended age-pattern — and you can run the program including such deviations to check what I’m saying, you’ll surely dramatically lower your lifetime tax savings from Roth conversions. Indeed, you can easily end up raising your lifetime taxes.

In this regard, I encourage households who have come up with a given Roth conversion plan — maybe one based on some method of bracket equalization — to use MaxiFi and enter their plan manually in a separate profile. Then compare it with a profile with no conversions and the one with MaxiFi’s recommended conversions.
Like most of you, I'm skeptical of converting a huge chunk up front. Clearly MaxFi is using different algorithms & making different assumptions than every other planner (and Kotlikoff is shouting this from the rooftop!). The million dollar question is, do you trust that they are right and everyone else is wrong?

I felt like I should have been eating a free dinner while reading that!
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Re: Large Roth conversions against conventional wisdom?

Post by smitcat »

Buzzman wrote: Tue Feb 04, 2025 4:23 pm
smitcat wrote: Tue Feb 04, 2025 3:19 pm You can run the models with any variables of these that you desire. Record the results and use that data for your future choice(s). I believe you did miss a few variables which will affect the results.
smitcat, I know you are a fan of these models but I'm skeptical. I've done what you say. Varied inputs and recorded outputs and got suspect results.

I'm sure I missed a bunch of variables. It's also not easy to know what all the random variables and their dependencies are. Are bond yields and inflation correlated? Probably. What about equity returns and inflation? Maybe. What about market volatility? Personally, I have a problem including any historical market data before there were telephones. Then there are all the underlying rules which change...Tax rates, tax laws, Roth rules, RMD rules, and more. The hardest part is in building the applicable data set, defining the underlying assumptions and then generating some kind of distribution and heuristics for their use. The math after that is the easy part.

In my opinion, (and it's just my opinion) the uncertainties in all of the inputs (data sets, taxes, rules and criteria) far outweigh any computational precision in the models.
I understand, but two questions then....
1. are you saying that you do not believe that a 'reasonable' real average return will not occurr over the nexct 20,30 40 years?
2. how can you retire with any plan for those retirement years?
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Re: Large Roth conversions against conventional wisdom?

Post by Buzzman »

smitcat wrote: Tue Feb 04, 2025 5:38 pm
I understand, but two questions then....
1. are you saying that you do not believe that a 'reasonable' real average return will not occurr over the nexct 20,30 40 years?
2. how can you retire with any plan for those retirement years?
1. Sure, I can hope for and plan for a reasonable average return over the next several years, but in reality, returns fluctuate wildly. While models can provide a range of probable outcomes, one must be very cautious about trusting the precision of their predictions.

What you’re asking about is just one random variable in the equation. The potential benefits (or drawbacks) of a Roth conversion depend on multiple random variables, each compounding over time.

To illustrate: I can predict with certainty that the sun will rise tomorrow, but I can’t predict the exact high temperature within a few tenths of a degree. Similarly, when a model tells me I could save $100K in taxes over 30 years through a series of Roth conversions, I have to ask: Is that truly significant if I’m already paying $50K in taxes every year for those 30 years? Maybe. Maybe not.

2. I use these models not for exact answers but as general indicators. Personally, I prefer tools like FICalc, which use historical year-by-year data rather than Monte Carlo simulations.

Additionally, I never aim for a 100% success rate in these models. Instead, I look for 85-90% success probability—because at 100%, you’re likely taking on too little risk.
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Re: Large Roth conversions against conventional wisdom?

Post by MathWizard »

For me, converting into the 22% bracket for 3 years,
below the IRMAA threshold and before claiming SS means
paying 22% now vs. paying 22.5 (15% times 1.5 due to
SS taxation), so a minor win, but it will also reduce RMDs
later for my wife when filing as a single.

I estimate that we will only need to be in the 15% bracket after
these 3 years (2023,4,5).
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Re: Large Roth conversions against conventional wisdom?

Post by smitcat »

Buzzman wrote: Tue Feb 04, 2025 7:14 pm
smitcat wrote: Tue Feb 04, 2025 5:38 pm
I understand, but two questions then....
1. are you saying that you do not believe that a 'reasonable' real average return will not occurr over the nexct 20,30 40 years?
2. how can you retire with any plan for those retirement years?
1. Sure, I can hope for and plan for a reasonable average return over the next several years, but in reality, returns fluctuate wildly. While models can provide a range of probable outcomes, one must be very cautious about trusting the precision of their predictions.

What you’re asking about is just one random variable in the equation. The potential benefits (or drawbacks) of a Roth conversion depend on multiple random variables, each compounding over time.

To illustrate: I can predict with certainty that the sun will rise tomorrow, but I can’t predict the exact high temperature within a few tenths of a degree. Similarly, when a model tells me I could save $100K in taxes over 30 years through a series of Roth conversions, I have to ask: Is that truly significant if I’m already paying $50K in taxes every year for those 30 years? Maybe. Maybe not.

2. I use these models not for exact answers but as general indicators. Personally, I prefer tools like FICalc, which use historical year-by-year data rather than Monte Carlo simulations.

Additionally, I never aim for a 100% success rate in these models. Instead, I look for 85-90% success probability—because at 100%, you’re likely taking on too little risk.
A few thoughts....
First - the models we run on Pralana do a host of other things besides considering Roth conversions. The ability to do models with varied returns allows one to view the best draw down strategies, AA locations, potential taxes , and costs of choices to name a few. The Roth conversion issues is just one of the options to view while modeling the plan.
Another - Roth conversions are far from a 'yes' or 'no' choice. Somtimes they do not make sense at all. Sometimes they are really a no brainer. But a vast majority of the time some fraction of the total is the best choice spread out over a number of years. So it never really is a do it now (or dont)
and do it big choice.
Maybe one more - looking at Roth conversions (or not) when considering heirs opens up a larger view of your holdings and how best to allocate them. Without any of these year by year models it becomes rather difficult to view the multiple funds positions and value over time.

And a couple of questions....
What happened when you modeled the varied rate of return? We modeled our portfolio based on historical rates of returns at various levels (70%, 40%, 20%, etc) and viewed the results. The resultant models and proposed optimized Roth conversion levels (% of total tax defferred converted) was quite valuable.

This observation in your post raises a few thoughts....
"Similarly, when a model tells me I could save $100K in taxes over 30 years through a series of Roth conversions, I have to ask: Is that truly significant if I’m already paying $50K in taxes every year for those 30 years? Maybe. Maybe not."
1. best to never use taxes as a metric, best to use total after tax funds (spendable) adjusted for inflation over the entire portfolio over its entire life.
2. conversion models - when we have a model that recommends a conversions and the model says we have $XXX dollars more due to conversions at the end ....that is just the start of the picture. Since the Roths are intended for our heirs there is another larger 'savings' that occurs there.
Additionally you need to view the added amount of Roths due to payment of taxes from the taxable account. And the lack of tax drag over the years from that same account. Many items add up to the total potential benifit from cpnversions which may be missed without modeling the correct metric over the entire portfolio life.
3. If you are not just using an example and are paying $50K in taxes each year you are very likely a candidate for Roth conversions.

This comment...
"I use these models not for exact answers but as general indicators. Personally, I prefer tools like FICalc, which use historical year-by-year data rather than Monte Carlo simulations."
With Pralana you can do both at the same time. You can also easily (one minute or less) set the initial year of historical data to start with whatever year you like for mutiple looks. We like to use the year 1965 as a tough acid test for some of the runs.

"Additionally, I never aim for a 100% success rate in these models. Instead, I look for 85-90% success probability—because at 100%, you’re likely taking on too little risk."
Exactly what we do - so here is the question(s)....
When you set your models for various retrun rates (100%, 70%, 40%, 20% , etc) and various draw/spending rates what do all of these combinations give you for Roth conversions?
- do all of them recommend conversions?
- do some recommend more or less conversions?
- what patterns do you see?
- do all of the 'most likely' scenarios recommend a fairly consistent plan?
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