IRA to Roth conversion question

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Wayneb
Posts: 2
Joined: Sat Jul 18, 2015 12:13 pm

IRA to Roth conversion question

Post by Wayneb » Wed Oct 10, 2018 12:38 pm

Hi all,

My wife is 61 and I am 64, both now retired. We have enough after tax money to last 2.5 more years when we will take Social security ( wife will be 64 and I will be 67) and will start taking withdrawals from our IRAs. My wife earned about 30,000 this year before retiring. We have a chance this year to move about 40,000 from an IRA to a Roth and pay 12 % in tax on it. Which Roth should we move the money to ? Hers or mine ? or does it make a difference ? My Ira/Roth is 600k/55k, hers is 900k/55k.

Thanks in advance.

PolarBearMarket
Posts: 11
Joined: Thu Sep 13, 2018 11:52 am

Re: IRA to Roth conversion question

Post by PolarBearMarket » Wed Oct 10, 2018 2:28 pm

Wayneb wrote:
Wed Oct 10, 2018 12:38 pm
Hi all,

My wife is 61 and I am 64, both now retired. We have enough after tax money to last 2.5 more years when we will take Social security ( wife will be 64 and I will be 67) and will start taking withdrawals from our IRAs. My wife earned about 30,000 this year before retiring. We have a chance this year to move about 40,000 from an IRA to a Roth and pay 12 % in tax on it. Which Roth should we move the money to ? Hers or mine ? or does it make a difference ? My Ira/Roth is 600k/55k, hers is 900k/55k.

Thanks in advance.
If you are filing jointly and all the traditional IRA contributions were deductible, I can't see any reason that it would make a difference which you convert first.

delamer
Posts: 6127
Joined: Tue Feb 08, 2011 6:13 pm

Re: IRA to Roth conversion question

Post by delamer » Wed Oct 10, 2018 2:31 pm

Whichever you choose, you will be reducing future RMDs in that spouse’s traditional IRA.

At first glance, I’d say that would argue for the older spouse — the one who would be required to take RMDs sooner — to do the Roth conversion. Because generally you want to defer taxes as long as possible.

But that is a “quick opinion” for what that is worth.

I am interested to hear other perspectives as this may be an issue for my husband and me in the near future.

Retired2013
Posts: 62
Joined: Sat Dec 12, 2015 2:53 pm

Re: IRA to Roth conversion question

Post by Retired2013 » Wed Oct 10, 2018 2:40 pm

Take a look at your state tax requirements. In NY each person has an exemption of $20k on pension income after age 59.5. In our case, would make sure I took $20k from each first, and not the full $40k from just one. If you're in a no income tax state, I guess that wouldn't matter.

retiredjg
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Re: IRA to Roth conversion question

Post by retiredjg » Wed Oct 10, 2018 3:04 pm

Maybe some of each, but converting more from the older person's IRA makes sense to me - because of RMDs.

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willthrill81
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Location: USA

Re: IRA to Roth conversion question

Post by willthrill81 » Wed Oct 10, 2018 3:18 pm

delamer wrote:
Wed Oct 10, 2018 2:31 pm
Whichever you choose, you will be reducing future RMDs in that spouse’s traditional IRA.

At first glance, I’d say that would argue for the older spouse — the one who would be required to take RMDs sooner — to do the Roth conversion. Because generally you want to defer taxes as long as possible.

But that is a “quick opinion” for what that is worth.

I am interested to hear other perspectives as this may be an issue for my husband and me in the near future.
I second that recommendation. Convert the older spouse's IRA assets first.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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