Can one have too much Roth?

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TomatoTomahto
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Re: Can one have too much Roth?

Post by TomatoTomahto » Sat Nov 30, 2019 2:07 pm

celia wrote:
Thu Nov 28, 2019 3:28 pm
TomatoTomahto wrote:
Thu Nov 28, 2019 3:16 pm
When Celia gives one of her impassioned pro-Roth posts, I move a bit closer to doing some Roth conversions. I understand, theoretically, that if we are willing to contribute to Roth 401k, we should be willing to do conversions, even if both are done at the highest current MFJ bracket.

But Celia, the flesh is weak. Keep it up, and someday I will do a conversion.
I hope so. I look forward to a post on it and why YOU decided to convert. :sharebeer

Have you considered converting just $1,000 now just to start the 5-year clock on owning a Roth? It's not hard, just do it! If you convert before the end of this year, your clock will be considered to have started on January 1, 2019. So the clock is just 4.1 years for you (only good until December 31). Don't delay or you might get caught up in the last minute rush of Vanguard (or other company) paperwork.
Posted a thread viewtopic.php?f=10&t=296337
Okay, I get it; I won't be political or controversial. The Earth is flat.

fru-gal
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Re: Can one have too much Roth?

Post by fru-gal » Sat Nov 30, 2019 2:27 pm

Eagle33 wrote:
Wed Nov 27, 2019 11:25 pm
willthrill81 wrote:
Wed Nov 27, 2019 11:08 pm
123 wrote:
Wed Nov 27, 2019 10:29 pm
However all things being equal it is likely better to have funds in a Roth account versus having them in a taxable account.
How could a taxable account ever beat a Roth?
When one needs Roth earnings before 59.5 y.o. No TLH with a Roth.

Though I am a big proponent of Roths.
I'm not sure what the Tallahassee airport has to do with a Roth.

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Miriam2
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Re: Can one have too much Roth?

Post by Miriam2 » Sat Nov 30, 2019 3:21 pm

fru-gal wrote:
Eagle33 wrote: When one needs Roth earnings before 59.5 y.o. No TLH with a Roth.
I'm not sure what the Tallahassee airport has to do with a Roth.
Don't know if the comment was a question :happy but our Wiki has a list of common financial acronyms - see the link for "Acronyms" on the left-hand side of the Wiki home page.

https://www.bogleheads.org/wiki/Abbrevi ... d_Acronyms

TLH - Tax Loss Harvesting. A technique which uses losses from a taxable investment, e.g. stocks, to reduce income taxes due.

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Miriam2
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Re: Can one have too much Roth?

Post by Miriam2 » Sat Nov 30, 2019 3:31 pm

OP here - thank you everyone for the many interesting and helpful posts.

Ed Slott has an article on "5 Reasons to keep some funds in traditional IRAs, even for Roth IRA lovers."
Many posts here have also pointed out these reasons:

1) Medical expenses deductions
2) Business losses deductions
3) Low tax brackets fill-up
4) Beneficiary tax rates
5) Qualified charitable distributions

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willthrill81
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Re: Can one have too much Roth?

Post by willthrill81 » Sat Nov 30, 2019 3:59 pm

randomguy wrote:
Sat Nov 30, 2019 11:46 am
willthrill81 wrote:
Sat Nov 30, 2019 10:42 am

Third, as you note, your analysis above would only cover the first 10 years of our retirement, so the strategy I laid out above is not "clearly wrong." Once we reach Medicare age, the above differences will vanish, and we will definitely in the first tier of IRMAA.
So our couple turns 65, what is better
a) having 1 million in tax deferred (i.e. the couple that didn't fund 55-64 using a ROTH)
b) having 1 million in tax deferred + 90k (i.e. that extra roth money)

You don't think B is clearly better than A?
We have both missed a potentially big problem with your analysis: pulling funds out of Roth accounts before age 59.5. Granted, contributions can be withdrawn prior to then, but we would not have enough to cover those 4.5 years. To implement your strategy, it would require $624k (assuming 0% returns for the 10 year period in question for the sake of simplicity) in Roth assets. We will not have that much.

Beyond that, what you're suggesting is to spend $62,400 (and an increasing amount) each of the ten years in question to save $9k in ACA premiums. That's an effective savings of 14.4% of the assets spent ($9k/$62.4k). But if we wait until age 70 to begin Roth withdrawals, when SS benefits and RMDs push us into the 22% bracket, we'll get a 22% effective savings on our Roth withdrawals then. The strategy you've laid out does save $90k from age 55-64, but it sacrifices significantly more than that in the future.

And as I noted, we simply can't do what you're suggesting because we don't have enough tax-deferred assets to convert, and I'm not sure that we would use an ACA plan at all anyway. So all this is merely academic.
Last edited by willthrill81 on Sat Nov 30, 2019 4:14 pm, edited 1 time in total.
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dodecahedron
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Re: Can one have too much Roth?

Post by dodecahedron » Sat Nov 30, 2019 4:09 pm

celia wrote:
Fri Nov 29, 2019 4:14 am
Even though various tax brackets may always exist, that doesn't mean your marginal tax rate will be in the lower brackets. For many people, their SS or pension will always fill up the lower bracket(s). On top of those brackets, those who saved in (or inherited) tax-deferred will be REQUIRED to withdraw later on as the government wants the taxes paid eventually.
Some of us may never be required to pay taxes on RMDs.

I have rolled all my tax-deferred funds into a 403(b) at my current part-time employer, where I have a part-time job I find very fulfilling and hope to continue to do indefinitely. As long as I am working there, I will not have RMDs. My plan is to roll over a portion of the funds to a tIRA each year after Jan 1 of the year I turn 70 1/2, for the purpose of QCDs (since QCDs can only come from an IRA) but I plan to keep the tIRA balance at zero as of 12/31 each year. So no RMDs as long as I continue to work, even past 70 1/2.

I realize that at some point my mental condition may deterioriate to the point at which I am no longer able to work, but at that point I would expect my condition to result in deductible LTC costs more than sufficient to offset the taxes on any RMDs.

My tax-deferred funds (and my HSA) are mentally earmarked for LTC or charitable donations/bequests in the happy eventuality that I never need LTC.
celia wrote:
Fri Nov 29, 2019 4:14 am
Those who saved in taxable will incur taxes when they sell (for a profit) or their funds pay out capital gains or dividends.
Not planning to realize capital gains during my lifetime. I donate some of my appreciated securities to charity each year. My qualified dividends are currently taxed at zero% and my heirs will get a stepup in basis on any securities remaining in my taxable account at my death.

My current portfolio is 23% tax-deferred, 50% taxable, 27% Roth. I do plan to continue mild Roth conversions on an occasional opportunistic basis (e.g., this year I have enough itemized deductions and available tax credits to Roth convert about $25K at zero cost in taxes, and I continue to contribute my part-time salary to a Roth 403b and Roth IRA, but I am not as gungho on Roth as Celia is for the reasons I described above.)

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Miriam2
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Re: Can one have too much Roth?

Post by Miriam2 » Sun Dec 01, 2019 4:06 pm

dodecahedron wrote: . . . I realize that at some point my mental condition may deteriorate to the point at which I am no longer able to work . . .
THAT will never happen :D

Thank you for your meaningful post.

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Miriam2
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Re: Can one have too much Roth?

Post by Miriam2 » Sun Dec 01, 2019 5:04 pm

celia wrote:
Miriam2 wrote: What is the downside or real negative to ending up with a Real Big Roth?
None!
There, I said it, when no-one else before me would. We had another thread recently where people shared their
taxable: tax-deferred: Roth portfolio ratio,
and I was the one who had the highest percentage in Roth, at over 50%. (Our percentage would have been higher had we not inherited large taxable assets.)
Thank you for referencing this other thread. It looks like good reading :happy

BHers. what is your Roth IRA %?

JBTX
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Re: Can one have too much Roth?

Post by JBTX » Sun Dec 01, 2019 7:27 pm

Miriam2 wrote:
Wed Nov 27, 2019 11:18 pm
willthrill81 wrote:
123 wrote:
Wed Nov 27, 2019 10:29 pm
The downside of having too much Roth is that you may have paid too much in tax to get it.
That's the issue. Too much Roth means that you paid $2 today to save $1 in taxes in the future, for instance.
I'm particularly interested in millennials - younger investors - who today are still in relatively low tax brackets. They would be paying the taxes to get into Roths now at a lower rate than they will likely be in 10 or 20 years from now. For millennials, they may have 30 years of investing before they retire. Packing their Roths now, and perhaps then continuing to convert tIRAs to Roths over the years - and they will end up with a giant Roth.

Any downside? Any downside to having a giant Roth and a smaller pre-tax account heading into retirement down the road?
I don't see much downside as long as they are contributing at low marginal rates, and you eventually contribute enough in traditional such that you can fill up the zero % bracket (standard deduction) during retirement.


But the theoretical downsides are:

- the tax code could change to makes Roths less favorable
- a sales or VAT consumption tax is implemented and income tax rates are lowered or eliminated.
- some sort of highly unlikely retroactively tax on Roth earnings.

To me having a good balance of both is of value, unless the particular situation favors one way or other (such as currently in a high marginal rate with plans to retire early).

Triple digit golfer
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Re: Can one have too much Roth?

Post by Triple digit golfer » Sun Dec 01, 2019 8:05 pm

I've seen a lot of posts in this thread and others lately about Roth conversions. Are most of the people converting in the 10 or 12% tax bracket? I can't imagine many people at all being above the 22% bracket in retirement, under current tax rates. I suppose with significant pensions, Social Security and traditional tax advantaged accounts it is possible, but it certainly seems unlikely for most. I would think most people with a lot of income in retirement have significant assets in taxable accounts, which wouldn't generate much taxable income.

In the 22% tax bracket, I am sticking with as much tax deferred contributions as I can, only using Roth for my IRA, not my wife's IRA or my 401k.

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Miriam2
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Re: Can one have too much Roth?

Post by Miriam2 » Sun Dec 01, 2019 10:18 pm

Triple digit golfer wrote: . . . Are most of the people converting in the 10 or 12% tax bracket? I can't imagine many people at all being above the 22% bracket in retirement, under current tax rates. I suppose with significant pensions, Social Security and traditional tax advantaged accounts it is possible, but it certainly seems unlikely for most. I would think most people with a lot of income in retirement have significant assets in taxable accounts, which wouldn't generate much taxable income.
There are many people, and many on this forum, who retire in higher tax brackets, the 28% on up, for precisely the reasons you mentioned - and it doesn't take much to move into the higher brackets. We are retired and are now in a tax bracket higher than we ever were when working. Our pensions, social security, RMDs, and retirement work paychecks catapulted us solidly up into the next tax bracket with no relief in sight :shock:

And the standard advice was (for good reason): one will most likely retire in a lower tax bracket so your withdrawals from pre-tax will be at a lower rate than if you paid taxes when you contributed.

One entirely unplanned-for financial event is that since I invested in a nondeductible tIRA before Roths were born and available to me, I contributed my money into the tIRA at much lower tax rates than now, and further, that money has already been taxed, so now when I convert to a Roth, due to the beloved pro-rata rule, I only have to pay taxes on some 45-50% of whatever I convert. Then again . . . since my current taxes are at a higher rate, then maybe I only come out even :confused

THIS is an example of how difficult it is to plan and predict and then "have happen" your financial future, and how wise it seems to have a nice Big Roth as well as a tIRA and pre-tax 401k and taxable account - as many other posters have suggested.

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willthrill81
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Re: Can one have too much Roth?

Post by willthrill81 » Sun Dec 01, 2019 11:16 pm

Triple digit golfer wrote:
Sun Dec 01, 2019 8:05 pm
I've seen a lot of posts in this thread and others lately about Roth conversions. Are most of the people converting in the 10 or 12% tax bracket? I can't imagine many people at all being above the 22% bracket in retirement, under current tax rates. I suppose with significant pensions, Social Security and traditional tax advantaged accounts it is possible, but it certainly seems unlikely for most. I would think most people with a lot of income in retirement have significant assets in taxable accounts, which wouldn't generate much taxable income.

In the 22% tax bracket, I am sticking with as much tax deferred contributions as I can, only using Roth for my IRA, not my wife's IRA or my 401k.
We only plan on doing Roth conversions in the 12% bracket for a long while. Eventually, in the 15 anticipated gap between retirement and beginning SS benefits, we may do some Roth conversions in the 22% bracket. While we're very unlikely to go above the 22% bracket in retirement while we're both alive, if my DW or I pass at separate points in time, the survivor could be pushed into the 24% bracket. Moving up from 22% to 24% isn't a big deal, but there are no RMDs on Roth accounts, and by that point in time, I anticipate that our daughter would rather inherit Roth than traditional accounts.
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MathIsMyWayr
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Re: Can one have too much Roth?

Post by MathIsMyWayr » Mon Dec 02, 2019 2:09 am

Miriam2 wrote:
Sun Dec 01, 2019 10:18 pm
Triple digit golfer wrote: . . . Are most of the people converting in the 10 or 12% tax bracket? I can't imagine many people at all being above the 22% bracket in retirement, under current tax rates. I suppose with significant pensions, Social Security and traditional tax advantaged accounts it is possible, but it certainly seems unlikely for most. I would think most people with a lot of income in retirement have significant assets in taxable accounts, which wouldn't generate much taxable income.
There are many people, and many on this forum, who retire in higher tax brackets, the 28% on up, for precisely the reasons you mentioned - and it doesn't take much to move into the higher brackets. We are retired and are now in a tax bracket higher than we ever were when working. Our pensions, social security, RMDs, and retirement work paychecks catapulted us solidly up into the next tax bracket with no relief in sight :shock:

And the standard advice was (for good reason): one will most likely retire in a lower tax bracket so your withdrawals from pre-tax will be at a lower rate than if you paid taxes when you contributed.

One entirely unplanned-for financial event is that since I invested in a nondeductible tIRA before Roths were born and available to me, I contributed my money into the tIRA at much lower tax rates than now, and further, that money has already been taxed, so now when I convert to a Roth, due to the beloved pro-rata rule, I only have to pay taxes on some 45-50% of whatever I convert. Then again . . . since my current taxes are at a higher rate, then maybe I only come out even :confused

THIS is an example of how difficult it is to plan and predict and then "have happen" your financial future, and how wise it seems to have a nice Big Roth as well as a tIRA and pre-tax 401k and taxable account - as many other posters have suggested.
There are two ways to make a mistake with traditional pre-tax vs. Roth:
  • Too much traditional and too little Roth: bad (you have too much money during retirement)
  • Too little traditional and too much Roth: BAD (you have too little money during retirement)

Triple digit golfer
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Re: Can one have too much Roth?

Post by Triple digit golfer » Mon Dec 02, 2019 6:05 am

MathIsMyWayr wrote:
Mon Dec 02, 2019 2:09 am
Miriam2 wrote:
Sun Dec 01, 2019 10:18 pm
Triple digit golfer wrote: . . . Are most of the people converting in the 10 or 12% tax bracket? I can't imagine many people at all being above the 22% bracket in retirement, under current tax rates. I suppose with significant pensions, Social Security and traditional tax advantaged accounts it is possible, but it certainly seems unlikely for most. I would think most people with a lot of income in retirement have significant assets in taxable accounts, which wouldn't generate much taxable income.
There are many people, and many on this forum, who retire in higher tax brackets, the 28% on up, for precisely the reasons you mentioned - and it doesn't take much to move into the higher brackets. We are retired and are now in a tax bracket higher than we ever were when working. Our pensions, social security, RMDs, and retirement work paychecks catapulted us solidly up into the next tax bracket with no relief in sight :shock:

And the standard advice was (for good reason): one will most likely retire in a lower tax bracket so your withdrawals from pre-tax will be at a lower rate than if you paid taxes when you contributed.

One entirely unplanned-for financial event is that since I invested in a nondeductible tIRA before Roths were born and available to me, I contributed my money into the tIRA at much lower tax rates than now, and further, that money has already been taxed, so now when I convert to a Roth, due to the beloved pro-rata rule, I only have to pay taxes on some 45-50% of whatever I convert. Then again . . . since my current taxes are at a higher rate, then maybe I only come out even :confused

THIS is an example of how difficult it is to plan and predict and then "have happen" your financial future, and how wise it seems to have a nice Big Roth as well as a tIRA and pre-tax 401k and taxable account - as many other posters have suggested.
There are two ways to make a mistake with traditional pre-tax vs. Roth:
  • Too much traditional and too little Roth: bad (you have too much money during retirement)
  • Too little traditional and too much Roth: BAD (you have too little money during retirement)
Thank you. That's where I was headed with this. If I stick with traditional and end up in a higher than anticipated tax bracket in retirement, sure, I was seeing in hindsight, but it's a great problem to have.

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dodecahedron
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Re: Can one have too much Roth?

Post by dodecahedron » Mon Dec 02, 2019 6:54 am

Triple digit golfer wrote:
Sun Dec 01, 2019 8:05 pm
I've seen a lot of posts in this thread and others lately about Roth conversions. Are most of the people converting in the 10 or 12% tax bracket? I can't imagine many people at all being above the 22% bracket in retirement, under current tax rates. I suppose with significant pensions, Social Security and traditional tax advantaged accounts it is possible, but it certainly seems unlikely for most. I would think most people with a lot of income in retirement have significant assets in taxable accounts, which wouldn't generate much taxable income.

In the 22% tax bracket, I am sticking with as much tax deferred contributions as I can, only using Roth for my IRA, not my wife's IRA or my 401k.
What you appear to be missing is that it is not actually your *bracket* that matters but your effective marginal tax rate. The latter *can* be the same as your bracket, but not always. There can be big discrepancies, especially for seniors.

There are retired folks in the 12% bracket whose effective marginal tax rate is around 50%. I expect to be one of those folks next year. The phenomenon is sometimes referred to as the ¨Tax Torpedo¨ or ¨Tax Hump.¨ (That is, an extra dollar of ordinary income, such as a tIRA distribution, may be taxed at 12% but also triggers an extra .85 of SS into being taxed, which increases AGI and taxable income by $1.85, which pushes another 1.85 of qualified dividends previously taxed at 0% into the 15% range. And we have not even begun to consider other indirect effects, e.g., if the household is in the MAGI phaseout range for an education credit or some other tax benefit.) And there are other considerations such as keeping retirement income low enough to qualify for senior citizen property tax breaks or below ACA cliff points or IRMAA thresholds.

For such folks, it might be worth considering at least some modest Roth conversions and/or Roth contributions at 22% even if they will be ¨in the 12% bracket¨ in their later years.

Admiral
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Re: Can one have too much Roth?

Post by Admiral » Mon Dec 02, 2019 7:16 am

Once retired, it's generally more advantageous to have $1m in Roth vs any other type of account (because: no taxes).

The issue is, how did it get there? Since we have no way of knowing what future tax rates will be, a Roth contribution is a gamble that current taxation will be lower than future taxation. For many married people, taxes will be higher when working (because: earned income). Thus, a Roth is not especially appealing. RMDs are a factor but most people don't have more than $1.5m in pre-tax accounts.

The situation where Roth is better (or as good) is one like my family's: two max SS payments and a relatively large pension. With NO portfolio withdrawals at all, we will likely be well into the 22% bracket already at age 70 (or possibly higher, if the tax law reverts). At age 70.5, RMDs would put us into 24% and conceivably higher. Therefore, all things being equal, I'm happy to pay 24% now on SOME retirement contributions (not all) to keep the pre-tax account from getting too high. (Also, I should note that under the old tax laws we were in the 28% bracket.)

We plan to convert from age 60 to 70.5. But since the pension begins at 60, we will ALREADY be into the (current) 22% bracket (though not at 24% where we are now). So conversion will have some benefit but not a lot.

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Re: Can one have too much Roth?

Post by rkhusky » Mon Dec 02, 2019 8:46 am

dodecahedron wrote:
Mon Dec 02, 2019 6:54 am
There are retired folks in the 12% bracket whose effective marginal tax rate is around 50%.
Interesting. I ran my tax software on a MFJ situation with $30K in other income, $60K in SS, $30K in dividends (all qualified). The marginal rate is about 50%. But the Taxable Income is $80.7K, which would seem to be in the 22% tax bracket. Is there a set of numbers (other income, SS, QD), where the Taxable Income is below $75K, and where adding $1K of income bumps your tax up $500, without other effects of tax credits, ACA, IRMAA, etc?

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Re: Can one have too much Roth?

Post by MathIsMyWayr » Mon Dec 02, 2019 8:55 am

dodecahedron wrote:
Mon Dec 02, 2019 6:54 am
Triple digit golfer wrote:
Sun Dec 01, 2019 8:05 pm
I've seen a lot of posts in this thread and others lately about Roth conversions. Are most of the people converting in the 10 or 12% tax bracket? I can't imagine many people at all being above the 22% bracket in retirement, under current tax rates. I suppose with significant pensions, Social Security and traditional tax advantaged accounts it is possible, but it certainly seems unlikely for most. I would think most people with a lot of income in retirement have significant assets in taxable accounts, which wouldn't generate much taxable income.

In the 22% tax bracket, I am sticking with as much tax deferred contributions as I can, only using Roth for my IRA, not my wife's IRA or my 401k.
What you appear to be missing is that it is not actually your *bracket* that matters but your effective marginal tax rate. The latter *can* be the same as your bracket, but not always. There can be big discrepancies, especially for seniors.

There are retired folks in the 12% bracket whose effective marginal tax rate is around 50%. I expect to be one of those folks next year. The phenomenon is sometimes referred to as the ¨Tax Torpedo¨ or ¨Tax Hump.¨ (That is, an extra dollar of ordinary income, such as a tIRA distribution, may be taxed at 12% but also triggers an extra .85 of SS into being taxed, which increases AGI and taxable income by $1.85, which pushes another 1.85 of qualified dividends previously taxed at 0% into the 15% range. And we have not even begun to consider other indirect effects, e.g., if the household is in the MAGI phaseout range for an education credit or some other tax benefit.) And there are other considerations such as keeping retirement income low enough to qualify for senior citizen property tax breaks or below ACA cliff points or IRMAA thresholds.

For such folks, it might be worth considering at least some modest Roth conversions and/or Roth contributions at 22% even if they will be ¨in the 12% bracket¨ in their later years.
Such problems are well known, but are often difficult to evade, especially if you have large SS+pension, RMD, and dividends. Roth conversion may help, but you have to be aggressive and find it difficult to prove besides accepting the results of existing retirement spending software such as iORP blindly. It is also sensitive to assumptions you have to make.

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dodecahedron
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Re: Can one have too much Roth?

Post by dodecahedron » Mon Dec 02, 2019 9:36 am

rkhusky wrote:
Mon Dec 02, 2019 8:46 am
dodecahedron wrote:
Mon Dec 02, 2019 6:54 am
There are retired folks in the 12% bracket whose effective marginal tax rate is around 50%.
Interesting. I ran my tax software on a MFJ situation with $30K in other income, $60K in SS, $30K in dividends (all qualified). The marginal rate is about 50%. But the Taxable Income is $80.7K, which would seem to be in the 22% tax bracket. Is there a set of numbers (other income, SS, QD), where the Taxable Income is below $75K, and where adding $1K of income bumps your tax up $500, without other effects of tax credits, ACA, IRMAA, etc?
In your scenario, the household has 50.7K in taxable ordinary income and $30K in taxable qualified dividends. Their bracket for ordinary income is 12% and their bracket for qualified dividends is 15%. (Edited to add: this is due to the ¨stacking rules,¨ explained here.)

They do not reach the 22% bracket until their taxable ordinary income exceeds $78,950 in 2019 (or $80,250 in 2020.)

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Re: Can one have too much Roth?

Post by midareff » Mon Dec 02, 2019 9:49 am

I wish I would have known about Roth conversions from tIRA sooner. No downside I can see, this is not like eating too much ice cream.

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Re: Can one have too much Roth?

Post by Admiral » Mon Dec 02, 2019 9:55 am

midareff wrote:
Mon Dec 02, 2019 9:49 am
I wish I would have known about Roth conversions from tIRA sooner. No downside I can see, this is not like eating too much ice cream.
The downside is really one of timing. It's something that can't really be done when one is working unless the salary is fairly low. So, it helps to retire early and have no or low earned income.

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dodecahedron
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Re: Can one have too much Roth?

Post by dodecahedron » Mon Dec 02, 2019 9:57 am

MathIsMyWayr wrote:
Mon Dec 02, 2019 8:55 am
dodecahedron wrote:
Mon Dec 02, 2019 6:54 am
...it is not actually your *bracket* that matters but your effective marginal tax rate. The latter *can* be the same as your bracket, but not always. There can be big discrepancies, especially for seniors.

There are retired folks in the 12% bracket whose effective marginal tax rate is around 50%. I expect to be one of those folks next year. The phenomenon is sometimes referred to as the ¨Tax Torpedo¨ or ¨Tax Hump.¨ (That is, an extra dollar of ordinary income, such as a tIRA distribution, may be taxed at 12% but also triggers an extra .85 of SS into being taxed, which increases AGI and taxable income by $1.85, which pushes another 1.85 of qualified dividends previously taxed at 0% into the 15% range. And we have not even begun to consider other indirect effects, e.g., if the household is in the MAGI phaseout range for an education credit or some other tax benefit.) And there are other considerations such as keeping retirement income low enough to qualify for senior citizen property tax breaks or below ACA cliff points or IRMAA thresholds.

For such folks, it might be worth considering at least some modest Roth conversions and/or Roth contributions at 22% even if they will be ¨in the 12% bracket¨ in their later years.
Such problems are well known, but are often difficult to evade, especially if you have large SS+pension, RMD, and dividends. Roth conversion may help, but you have to be aggressive and find it difficult to prove besides accepting the results of existing retirement spending software such as iORP blindly. It is also sensitive to assumptions you have to make.
Not sure it is correct to say that such problems are well known. Even a long time tax nerd like myself did not start thinking about this phenomenon until I was almost 60. (I had long been very aware about high effective marginal tax rates for low-income working families, but the notion that a similar phenomenon would ultimately apply to me in my later years was not on my radar screen.) Certainly at the time I started contributing to tax-deferred accounts (in the late 1970s), the tax provisions that now create this divergence between brackets and effective marginal tax rates did not exist. (SS was not taxable and dividends were all taxed as ordinary income back then.)

Yes, it does get discussed a lot on Bogleheads, but this is a pretty rarified crowd. I have a very educated circle of friends, including lots of mathy folks, scientists, engineers, etc. and most of them have no clue about their effective marginal tax rates. And even among Bogleheads there are lots of folks who use the word ¨bracket¨ as if it were necessarily synonymous with effective marginal tax rate.

As far as whether it is difficult to avoid the problem, yes, it is tricky and assumptions need to be made, which may or may not work out to be true. In my case, it helps that charitable giving is a significant portion of my budget but I have considerable flexibility about the timing of my gifts. It also helps that I plan to continue to working part-time, which allows me to put off RMDs indefinitely and gives me additional time to do tax efficient Roth conversions in a very gradual and opportunistic (low cost) manner.

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Re: Can one have too much Roth?

Post by TomatoTomahto » Mon Dec 02, 2019 11:53 am

Admiral wrote:
Mon Dec 02, 2019 9:55 am
midareff wrote:
Mon Dec 02, 2019 9:49 am
I wish I would have known about Roth conversions from tIRA sooner. No downside I can see, this is not like eating too much ice cream.
The downside is really one of timing. It's something that can't really be done when one is working unless the salary is fairly low. So, it helps to retire early and have no or low earned income.
I think it can be done when one is working, even at a high salary. The $64M question is how high marginal rates will be, but I figure, at worst, I made a mistake of a few percent. More likely, I’ll be saving double digit percent.
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: Can one have too much Roth?

Post by Admiral » Mon Dec 02, 2019 11:57 am

TomatoTomahto wrote:
Mon Dec 02, 2019 11:53 am
Admiral wrote:
Mon Dec 02, 2019 9:55 am
midareff wrote:
Mon Dec 02, 2019 9:49 am
I wish I would have known about Roth conversions from tIRA sooner. No downside I can see, this is not like eating too much ice cream.
The downside is really one of timing. It's something that can't really be done when one is working unless the salary is fairly low. So, it helps to retire early and have no or low earned income.
I think it can be done when one is working, even at a high salary. The $64M question is how high marginal rates will be, but I figure, at worst, I made a mistake of a few percent. More likely, I’ll be saving double digit percent.
Well sure it CAN be done, the issue is the marginality of the benefit. Also one has to have the money in taxable to pay the tax owed on the conversion.

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Re: Can one have too much Roth?

Post by jhawktx » Mon Dec 02, 2019 12:30 pm

Ocean77 wrote:
Thu Nov 28, 2019 7:11 pm
The Roth accounts will likely become even more valuable 10, 20 or 30 years down the road. As the US population ages and baby boomers are retiring en masse, I would not be surprised if the tax laws will change to extract more taxes from older folks.
Oh, you mean like beginning to tax Roth IRA withdrawals?

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Re: Can one have too much Roth?

Post by Admiral » Mon Dec 02, 2019 12:44 pm

jhawktx wrote:
Mon Dec 02, 2019 12:30 pm
Ocean77 wrote:
Thu Nov 28, 2019 7:11 pm
The Roth accounts will likely become even more valuable 10, 20 or 30 years down the road. As the US population ages and baby boomers are retiring en masse, I would not be surprised if the tax laws will change to extract more taxes from older folks.
Oh, you mean like beginning to tax Roth IRA withdrawals?
That would be unlikely as it would be double taxation. What they might do is disallow conversion. Or something. Anyway we can't speculate on future tax laws.

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Re: Can one have too much Roth?

Post by jhawktx » Mon Dec 02, 2019 1:17 pm

Admiral wrote:
Mon Dec 02, 2019 12:44 pm
jhawktx wrote:
Mon Dec 02, 2019 12:30 pm
Ocean77 wrote:
Thu Nov 28, 2019 7:11 pm
The Roth accounts will likely become even more valuable 10, 20 or 30 years down the road. As the US population ages and baby boomers are retiring en masse, I would not be surprised if the tax laws will change to extract more taxes from older folks.
Oh, you mean like beginning to tax Roth IRA withdrawals?
That would be unlikely as it would be double taxation. What they might do is disallow conversion. Or something. Anyway we can't speculate on future tax laws.
I guess you're right. Double taxation could never happen. I mean, taxing Roth IRA withdrawals would be like taxing dividends. Oh wait, we do tax dividends twice. Nevermind.

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Re: Can one have too much Roth?

Post by smitcat » Mon Dec 02, 2019 1:24 pm

jhawktx wrote:
Mon Dec 02, 2019 1:17 pm
Admiral wrote:
Mon Dec 02, 2019 12:44 pm
jhawktx wrote:
Mon Dec 02, 2019 12:30 pm
Ocean77 wrote:
Thu Nov 28, 2019 7:11 pm
The Roth accounts will likely become even more valuable 10, 20 or 30 years down the road. As the US population ages and baby boomers are retiring en masse, I would not be surprised if the tax laws will change to extract more taxes from older folks.
Oh, you mean like beginning to tax Roth IRA withdrawals?
That would be unlikely as it would be double taxation. What they might do is disallow conversion. Or something. Anyway we can't speculate on future tax laws.
I guess you're right. Double taxation could never happen. I mean, taxing Roth IRA withdrawals would be like taxing dividends. Oh wait, we do tax dividends twice. Nevermind.
That of course could lead to taxing your SS income ….(lol)

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Re: Can one have too much Roth?

Post by rkhusky » Mon Dec 02, 2019 1:44 pm

dodecahedron wrote:
Mon Dec 02, 2019 9:36 am
rkhusky wrote:
Mon Dec 02, 2019 8:46 am
dodecahedron wrote:
Mon Dec 02, 2019 6:54 am
There are retired folks in the 12% bracket whose effective marginal tax rate is around 50%.
Interesting. I ran my tax software on a MFJ situation with $30K in other income, $60K in SS, $30K in dividends (all qualified). The marginal rate is about 50%. But the Taxable Income is $80.7K, which would seem to be in the 22% tax bracket. Is there a set of numbers (other income, SS, QD), where the Taxable Income is below $75K, and where adding $1K of income bumps your tax up $500, without other effects of tax credits, ACA, IRMAA, etc?
In your scenario, the household has 50.7K in taxable ordinary income and $30K in taxable qualified dividends. Their bracket for ordinary income is 12% and their bracket for qualified dividends is 15%. (Edited to add: this is due to the ¨stacking rules,¨ explained here.)

They do not reach the 22% bracket until their taxable ordinary income exceeds $78,950 in 2019 (or $80,250 in 2020.)
Right-two different tax brackets. But you do not appear to need to worry about the 50% marginal rate until your combined taxable ordinary income + LTCG/QDI > $78,750.

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Re: Can one have too much Roth?

Post by Admiral » Mon Dec 02, 2019 1:53 pm

jhawktx wrote:
Mon Dec 02, 2019 1:17 pm
Admiral wrote:
Mon Dec 02, 2019 12:44 pm
jhawktx wrote:
Mon Dec 02, 2019 12:30 pm
Ocean77 wrote:
Thu Nov 28, 2019 7:11 pm
The Roth accounts will likely become even more valuable 10, 20 or 30 years down the road. As the US population ages and baby boomers are retiring en masse, I would not be surprised if the tax laws will change to extract more taxes from older folks.
Oh, you mean like beginning to tax Roth IRA withdrawals?
That would be unlikely as it would be double taxation. What they might do is disallow conversion. Or something. Anyway we can't speculate on future tax laws.
I guess you're right. Double taxation could never happen. I mean, taxing Roth IRA withdrawals would be like taxing dividends. Oh wait, we do tax dividends twice. Nevermind.
There’s a chasm of difference between tax on capital and tax on labor. At least, for now.

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Re: Can one have too much Roth?

Post by Andrew321 » Mon Dec 02, 2019 1:56 pm

Miriam2 wrote:
Wed Nov 27, 2019 11:18 pm
willthrill81 wrote:
123 wrote:
Wed Nov 27, 2019 10:29 pm
The downside of having too much Roth is that you may have paid too much in tax to get it.
That's the issue. Too much Roth means that you paid $2 today to save $1 in taxes in the future, for instance.
I'm particularly interested in millennials - younger investors - who today are still in relatively low tax brackets. They would be paying the taxes to get into Roths now at a lower rate than they will likely be in 10 or 20 years from now. For millennials, they may have 30 years of investing before they retire. Packing their Roths now, and perhaps then continuing to convert tIRAs to Roths over the years - and they will end up with a giant Roth.

Any downside? Any downside to having a giant Roth and a smaller pre-tax account heading into retirement down the road?
Millennial here-I switched one pre-tax 457 into a Roth IRA. The tax rate right now is 17.1 (12 fed, 5.1 MA) and my tax will almost certainly be higher when I retire because of my pension and 36 years of investing. I can't imagine a downside unless tax laws change drastically.

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Re: Can one have too much Roth?

Post by TomatoTomahto » Mon Dec 02, 2019 2:29 pm

Admiral wrote:
Mon Dec 02, 2019 11:57 am
TomatoTomahto wrote:
Mon Dec 02, 2019 11:53 am
Admiral wrote:
Mon Dec 02, 2019 9:55 am
midareff wrote:
Mon Dec 02, 2019 9:49 am
I wish I would have known about Roth conversions from tIRA sooner. No downside I can see, this is not like eating too much ice cream.
The downside is really one of timing. It's something that can't really be done when one is working unless the salary is fairly low. So, it helps to retire early and have no or low earned income.
I think it can be done when one is working, even at a high salary. The $64M question is how high marginal rates will be, but I figure, at worst, I made a mistake of a few percent. More likely, I’ll be saving double digit percent.
Well sure it CAN be done, the issue is the marginality of the benefit. Also one has to have the money in taxable to pay the tax owed on the conversion.
I didn’t mean that it CAN only be done by someone innumerate or insane. We are doing it, at a 42% or so bracket, because I believe that it makes financial sense. I think the likely error (ie, lower tax rate on withdrawals and more generous estate tax scenario) is smaller than the likely win (ie, high tax rate on my widow’s withdrawals and the effect of inheritance tax and heirs’ tax rates). There are no sure things, but I think it’s a reasonable trade.

We do have the money in taxable. FWIW, reducing the size of taxable will also be a benefit, as it throws off roughly 2% taxable income.
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: Can one have too much Roth?

Post by pdavi21 » Mon Dec 02, 2019 3:13 pm

At a minimum, one should have enough traditional handy to do conversions in the event their marginal tax falls. Also, rule 72(t) is a nice tool to keep in one's back pocket. The likelihood of one's marginal tax (unpredictably or predictably) being lower for several years in the future is very high.

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Re: Can one have too much Roth?

Post by Caduceus » Mon Dec 02, 2019 3:19 pm

TomatoTomahto wrote:
Mon Dec 02, 2019 2:29 pm

I didn’t mean that it CAN only be done by someone innumerate or insane. We are doing it, at a 42% or so bracket, because I believe that it makes financial sense. I think the likely error (ie, lower tax rate on withdrawals and more generous estate tax scenario) is smaller than the likely win (ie, high tax rate on my widow’s withdrawals and the effect of inheritance tax and heirs’ tax rates). There are no sure things, but I think it’s a reasonable trade.

We do have the money in taxable. FWIW, reducing the size of taxable will also be a benefit, as it throws off roughly 2% taxable income.
I agree with you that the Roth benefit is usually under-estimated. But I've ran various tax models in Excel and I've never come across a situation where the Roth would out-perform a traditional vehicle at a 42% tax bracket. I've gone up to 35% with various assumptions. How did you arrive at the 42% calculation in your case - i.e. that the Roth is likely worth it even at a 42% marginal tax bracket? As someone who loves the Roth, I am always happy for more reasons to entrench that love. :D

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Re: Can one have too much Roth?

Post by Admiral » Mon Dec 02, 2019 3:27 pm

Caduceus wrote:
Mon Dec 02, 2019 3:19 pm
TomatoTomahto wrote:
Mon Dec 02, 2019 2:29 pm

I didn’t mean that it CAN only be done by someone innumerate or insane. We are doing it, at a 42% or so bracket, because I believe that it makes financial sense. I think the likely error (ie, lower tax rate on withdrawals and more generous estate tax scenario) is smaller than the likely win (ie, high tax rate on my widow’s withdrawals and the effect of inheritance tax and heirs’ tax rates). There are no sure things, but I think it’s a reasonable trade.

We do have the money in taxable. FWIW, reducing the size of taxable will also be a benefit, as it throws off roughly 2% taxable income.
I agree with you that the Roth benefit is usually under-estimated. But I've ran various tax models in Excel and I've never come across a situation where the Roth would out-perform a traditional vehicle at a 42% tax bracket. I've gone up to 35% with various assumptions. How did you arrive at the 42% calculation in your case - i.e. that the Roth is likely worth it even at a 42% marginal tax bracket? As someone who loves the Roth, I am always happy for more reasons to entrench that love. :D
I believe TomatoTomahto lives in Taxachusettes and is also looking to reduce potential estate taxation. Clearly one would need many many millions (and, possibly a large pension) to hit a 42% marginal bracket in retirement with SS+portfolio draw+pension [EDIT to ADD: for a married couple. Obv for a single widow/widower the brackets are different.]

But, some people have (or will have) lots of money. I would not convert at that marginal rate, but that's me.

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Re: Can one have too much Roth?

Post by dodecahedron » Mon Dec 02, 2019 3:33 pm

rkhusky wrote:
Mon Dec 02, 2019 1:44 pm
dodecahedron wrote:
Mon Dec 02, 2019 9:36 am
rkhusky wrote:
Mon Dec 02, 2019 8:46 am
dodecahedron wrote:
Mon Dec 02, 2019 6:54 am
There are retired folks in the 12% bracket whose effective marginal tax rate is around 50%.
Interesting. I ran my tax software on a MFJ situation with $30K in other income, $60K in SS, $30K in dividends (all qualified). The marginal rate is about 50%. But the Taxable Income is $80.7K, which would seem to be in the 22% tax bracket. Is there a set of numbers (other income, SS, QD), where the Taxable Income is below $75K, and where adding $1K of income bumps your tax up $500, without other effects of tax credits, ACA, IRMAA, etc?
In your scenario, the household has 50.7K in taxable ordinary income and $30K in taxable qualified dividends. Their bracket for ordinary income is 12% and their bracket for qualified dividends is 15%. (Edited to add: this is due to the ¨stacking rules,¨ explained here.)

They do not reach the 22% bracket until their taxable ordinary income exceeds $78,950 in 2019 (or $80,250 in 2020.)
Right-two different tax brackets. But you do not appear to need to worry about the 50% marginal rate until your combined taxable ordinary income + LTCG/QDI > $78,750.
As widow (filing single), the issue with 50% effective marginal tax rates arises for me if taxable ordinary income + qualified dividends is greater than $39,375.

Even though I am a long-time tax nerd, I never imagined back when I started contributing money to tax-deferred plans in the late 1970s that I would face such high effective marginal tax rates in my retirement years, particular with relatively modest income and in a time with a historically low tax statutory bracket schedule.
Last edited by dodecahedron on Mon Dec 02, 2019 3:38 pm, edited 2 times in total.

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Re: Can one have too much Roth?

Post by TomatoTomahto » Mon Dec 02, 2019 3:35 pm

Some of my reasoning about Roth for our family can be found in viewtopic.php?f=10&t=296337, wherein I thank Celia for getting me to at least open a Roth (my wife has Roth 401k and Roth IRA).
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: Can one have too much Roth?

Post by TomatoTomahto » Mon Dec 02, 2019 3:38 pm

Admiral wrote:
Mon Dec 02, 2019 3:27 pm
I believe TomatoTomahto lives in Taxachusettes ...
You say Taxachusettes, I say ...

It feels tax free after NJ :D
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: Can one have too much Roth?

Post by celia » Mon Dec 02, 2019 3:39 pm

Miriam2 wrote:
Sun Dec 01, 2019 5:04 pm
celia wrote:
Miriam2 wrote: What is the downside or real negative to ending up with a Real Big Roth?
None!
There, I said it, when no-one else before me would. We had another thread recently where people shared their
taxable: tax-deferred: Roth portfolio ratio,
and I was the one who had the highest percentage in Roth, at over 50%. (Our percentage would have been higher had we not inherited large taxable assets.)
Thank you for referencing this other thread. It looks like good reading :happy

BHers. what is your Roth IRA %?
Actually, this is the thread I was thinking of:
Tax Deferred : Taxable : Tax Free
Miriam, you'll find it interesting too.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

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Re: Can one have too much Roth?

Post by dodecahedron » Mon Dec 02, 2019 3:42 pm

TomatoTomahto wrote:
Mon Dec 02, 2019 3:38 pm
Admiral wrote:
Mon Dec 02, 2019 3:27 pm
I believe TomatoTomahto lives in Taxachusettes ...
You say Taxachusettes, I say ...

It feels tax free after NJ :D
Once upon a time (when our family lived there over 30 years ago) Taxachusetts was a well-deserved name. That is no longer true. Massachusetts is middle of the pack in state tax burden. And particularly so for high earner households.

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Re: Can one have too much Roth?

Post by rkhusky » Mon Dec 02, 2019 4:34 pm

dodecahedron wrote:
Mon Dec 02, 2019 3:33 pm
rkhusky wrote:
Mon Dec 02, 2019 1:44 pm
Right-two different tax brackets. But you do not appear to need to worry about the 50% marginal rate until your combined taxable ordinary income + LTCG/QDI > $78,750.
As widow (filing single), the issue with 50% effective marginal tax rates arises for me if taxable ordinary income + qualified dividends is greater than $39,375.

Even though I am a long-time tax nerd, I never imagined back when I started contributing money to tax-deferred plans in the late 1970s that I would face such high effective marginal tax rates in my retirement years, particular with relatively modest income and in a time with a historically low tax statutory bracket schedule.
I was talking about MFJ, but yes for single. Goes to show that we shouldn't depend on our tax situation to remain the same for 40 years. Using the current situation is what we should use for planning purposes, but should also try to get as much robustness in our portfolios for potential changes. And there is no sense in developing a fine-tuned plan, because it will likely turn out to be brittle.

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Re: Can one have too much Roth?

Post by celia » Mon Dec 02, 2019 4:36 pm

Triple digit golfer wrote:
Sun Dec 01, 2019 8:05 pm
I've seen a lot of posts in this thread and others lately about Roth conversions. Are most of the people converting in the 10 or 12% tax bracket? I can't imagine many people at all being above the 22% bracket in retirement, under current tax rates. I suppose with significant pensions, Social Security and traditional tax advantaged accounts it is possible, but it certainly seems unlikely for most. I would think most people with a lot of income in retirement have significant assets in taxable accounts, which wouldn't generate much taxable income.

In the 22% tax bracket, I am sticking with as much tax deferred contributions as I can, only using Roth for my IRA, not my wife's IRA or my 401k.
Bogleheads tend to have better than average incomes and are savers. Because of that, many of them will have better than average income in retirement too (pensions, higher SS, more taxable dividends, and larger RMDs). Sure, some of them have incomes near the average, and they come here to be better investors. Roth conversions may not be so useful for them.

We are another example of someone in higher tax brackets while retired compared to when working. The unplanned event that put us here was an inheritance (in the low 6 figures) that had taxable, traditional IRAs, and Roth IRAs. We were on the path to having all our traditional IRAs converted by 70 when the Inherited IRA showed up. RMDs are required from both Inherited IRAs starting in the year after death and the withdrawals from the traditional IRA (a lot more than the RMD) took up tax space that could have been used for our own Roth conversions.

We also started doing Roth conversion while working in 2008 as the markets started to drop. Our tax rate at the time was over 22% but when I saw the opportunity to convert when stocks were at half price, I jumped on it and converted almost all the remaining stock funds we had. (We were able to recharacterize the earlier conversions in that year.) To me, converting when stocks are half their value was like having a "sale" on Roth conversion taxes since it was like having to pay half the tax, even if we were at a higher tax bracket. (The higher your tax bracket, the more you saved! Half off a bigger number is more than half off a smaller number.) When stocks rebounded a year later, I was glad that we had paid taxes on only half their value.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

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Re: Can one have too much Roth?

Post by celia » Mon Dec 02, 2019 4:41 pm

dodecahedron wrote:
Mon Dec 02, 2019 3:42 pm
Once upon a time (when our family lived there over 30 years ago) Taxachusetts was a well-deserved name. That is no longer true. Massachusetts is middle of the pack in state tax burden. And particularly so for high earner households.
But I understand that the estate taxes kick in for a lot lower assets than the federal exemptions. They'll get you on your way out! :(
Their exemption is only one million. https://www.mass.gov/estate-tax
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

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Re: Can one have too much Roth?

Post by dodecahedron » Mon Dec 02, 2019 5:41 pm

celia wrote:
Mon Dec 02, 2019 4:41 pm
dodecahedron wrote:
Mon Dec 02, 2019 3:42 pm
Once upon a time (when our family lived there over 30 years ago) Taxachusetts was a well-deserved name. That is no longer true. Massachusetts is middle of the pack in state tax burden. And particularly so for high earner households.
But I understand that the estate taxes kick in for a lot lower assets than the federal exemptions. They'll get you on your way out! :(
Their exemption is only one million. https://www.mass.gov/estate-tax
State estate taxes used to be no big deal because they received a dollar for dollar offset against federal estate tax liability at a time when most estates of any size actually had federal tax liability. So they were a relatively painless source of tax revenue for states. After federal estate tax law provisions virtually eliminated the estate tax, state estate taxes became painful and most states have coordinated their state exemptions with the federal exemption laws. I don´t know why Massachusetts seems to be taking longer than most states to get with the program, but meanwhile there are easy workarounds involving lifetime giving, since Massachusetts has no tax on inter vivos gifts.

http://www.margolis.com/our-blog/explai ... nd-gifting

I am sure a Mass tax attorney can arrange something tax efficient for anyone in the Commonwealth with a large estate.

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Re: Can one have too much Roth?

Post by TomatoTomahto » Mon Dec 02, 2019 5:49 pm

dodecahedron wrote: there are easy workarounds involving lifetime giving, since Massachusetts has no tax on inter vivos gifts.
We are maxing the annual exempt gift amount
. I’m not sure that the “easy” workarounds are easy or effective, especially after the Federal gift tax exclusions revert.
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: Can one have too much Roth?

Post by dodecahedron » Mon Dec 02, 2019 6:20 pm

TomatoTomahto wrote:
Mon Dec 02, 2019 5:49 pm
dodecahedron wrote: there are easy workarounds involving lifetime giving, since Massachusetts has no tax on inter vivos gifts.
We are maxing the annual exempt gift amount
. I’m not sure that the “easy” workarounds are easy or effective, especially after the Federal gift tax exclusions revert.
Once gift tax exclusions revert, you can offset your Mass estate tax liability against your federal tax liability--problem solved, at least at the state level.

I do agree in general that Roth conversions can make extra good sense for folks with state estate tax liability that exceeds their expected federal estate tax liability. (This is not a problem I personally have, now that NY has updated their estate tax laws.) Moving to Massachusetts (a state I lived in for many years and still enjoy visiting) would complicate my life in many ways.

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Re: Can one have too much Roth?

Post by MichDad » Tue Dec 03, 2019 6:09 pm

I just saw this article and thought it might be relevant to this thread.

https://www.cnbc.com/2019/11/27/moving- ... reaks.html

MichDad

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Re: Can one have too much Roth?

Post by jhawktx » Tue Dec 03, 2019 8:36 pm

MichDad wrote:
Tue Dec 03, 2019 6:09 pm
I just saw this article and thought it might be relevant to this thread.

https://www.cnbc.com/2019/11/27/moving- ... reaks.html

MichDad
Good summary article. Many on this board go way overboard on Roth conversions. It won't be long before we see a thread titled, "How can I get 120% of my assets into a Roth IRA?"

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Re: Can one have too much Roth?

Post by willthrill81 » Wed Dec 04, 2019 12:18 am

MichDad wrote:
Tue Dec 03, 2019 6:09 pm
I just saw this article and thought it might be relevant to this thread.

https://www.cnbc.com/2019/11/27/moving- ... reaks.html

MichDad
The issue brought up there with regard to medical care in retirement is a big one. Being able to pay for a LTC event costing hundreds of thousands with withdrawals from tax-deferred accounts, since all medical expenses more than 7.5% of your AGI are tax deductible, can be a big tax boon.
“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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Re: Can one have too much Roth?

Post by HereToLearn » Wed Dec 04, 2019 12:28 am

willthrill81 wrote:
Wed Dec 04, 2019 12:18 am
MichDad wrote:
Tue Dec 03, 2019 6:09 pm
I just saw this article and thought it might be relevant to this thread.

https://www.cnbc.com/2019/11/27/moving- ... reaks.html

MichDad
The issue brought up there with regard to medical care in retirement is a big one. Being able to pay for a LTC event costing hundreds of thousands with withdrawals from tax-deferred accounts, since all medical expenses more than 7.5% of your AGI are tax deductible, can be a big tax boon.
I think the deduction threshold reverted to 10% for all taxpayers as of 2019. Point still the same.

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