Roth conversion early or late?

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Roth conversion early or late?

Post by Blister » Thu Feb 13, 2020 8:59 pm

Just trying to get some opinions. Have been doing some tIRA to Roth conversions since retirement since retiring and was thinking whether it makes more sense to do this early in the year or wait till December. Any thoughts ... What do others do in this situation?
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Re: Roth conversion early or late?

Post by mhalley » Thu Feb 13, 2020 9:06 pm

There are pluses and minuses to both. Done towards the end of the year, you have a clearer picture of your tax situation and exactly how much you can convert at your desired tax bracket. But as the stock market trends up, you might be able to convert less shares due to a nav increase. I do it in late dec. myself, but I have some shares in a private stock that sometimes gives surprise distributions.

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Re: Roth conversion early or late?

Post by czaj » Thu Feb 13, 2020 9:22 pm

I think a combination of the two can make sense.

1. Convert most of the estimated desired amount early in the year (to capture expected gains in Roth throughout the year).
2. Use an end of year conversion to optimize based on tax situation.

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Re: Roth conversion early or late?

Post by RetiredAL » Thu Feb 13, 2020 9:28 pm

If there is a good dip during the year, I'll do mine during the dip as a fortuitous gift, otherwise I'll do it in Dec.

So far it's been Dec the last 4 years. The one decent dip that did occur happened in a Dec.

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Re: Roth conversion early or late?

Post by WoodSpinner » Thu Feb 13, 2020 10:48 pm


I have been using a Pseudo Dollar Cost Averaging approach. Concert a bit every month with an option for more if there is a Dip. I haven’t backtested it but it seems reasonable to me. :?



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Re: Roth conversion early or late?

Post by Lee_WSP » Thu Feb 13, 2020 10:50 pm

Could keep it in taxable until the beginning of December. That way you can be sure you won't forget you made XYZ contribution or rollover.

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Re: Roth conversion early or late?

Post by GAAP » Fri Feb 14, 2020 12:43 pm

I've been doing them at the start of the year with a true-up at the end of the year. I'm thinking about quarterly this year -- effectively a DCA approach. I might speed up the conversions if a "significant" market drop occurred -- but I'll have to define what that means first.

I do miss the re-characterization option...
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