Grim Question [taking more than RMD?]

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winski58
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Grim Question [taking more than RMD?]

Post by winski58 »

Should you take more than the RMDs in early retirement in order to lower your RMDs in the future when tax liability increases substantially (joint vs single filing) after the passing of your spouse?
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munemaker
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Re: Grim Question

Post by munemaker »

Do Roth conversions rather than RMDs.
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anon_investor
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Re: Grim Question

Post by anon_investor »

munemaker wrote: Wed Jun 09, 2021 6:17 am Do Roth conversions rather than RMDs.
+1.
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Wiggums
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Re: Grim Question

Post by Wiggums »

We are doing Roth conversions each year. Whatever we can remove will help.
Chris K Jones
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Re: Grim Question

Post by Chris K Jones »

Like all of your replies above, I plan to take distributions in low income years prior to RMDs. In years when I don't need the cash, these will be Roth conversions. My strategy is to take enough income to fill the 24% tax bracket in those years. If you search Roth conversions in the Google Boglehead search bar above you will find lots of discussions. Best wishes.
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winski58
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Re: Grim Question

Post by winski58 »

munemaker wrote: Wed Jun 09, 2021 6:17 am Do Roth conversions rather than RMDs.
Yes. Should have clarified in my question the plan to transfer funds to our Traditional IRA and then convert to our ROTH IRAs...thanks.
Chuckles960
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Re: Grim Question [taking more than RMD?]

Post by Chuckles960 »

The technical term is "bracket topping".
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ruralavalon
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Re: Grim Question

Post by ruralavalon »

anon_investor wrote: Wed Jun 09, 2021 6:17 am
munemaker wrote: Wed Jun 09, 2021 6:17 am Do Roth conversions rather than RMDs.
+1.
+ 2.

Wiki article Roth IRA conversion.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
Vanguard Fan 1367
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Re: Grim Question

Post by Vanguard Fan 1367 »

ruralavalon wrote: Wed Jun 09, 2021 2:21 pm
anon_investor wrote: Wed Jun 09, 2021 6:17 am
munemaker wrote: Wed Jun 09, 2021 6:17 am Do Roth conversions rather than RMDs.
+1.
+ 2.

Wiki article Roth IRA conversion.
+3. i am glad that I find time to peruse the Bogleheads Forum and learning about Roth Conversions is part of many great lessons that the Boglehead Masters have taught me.
John Bogle: "It's amazing how difficult it is for a man to understand something if he's paid a small fortune not to understand it."
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FIREchief
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Re: Grim Question

Post by FIREchief »

munemaker wrote: Wed Jun 09, 2021 6:17 am Do Roth conversions rather than RMDs.
I'm confused. Are you suggesting that a person can choose to Roth convert instead of taking an RMD? Hopefully you're talking about Roth conversions prior to age 72 to reduce the eventual RMDs.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
sd1357
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Re: Grim Question [taking more than RMD?]

Post by sd1357 »

Topping Federal bracket is a good idea but keep your IRMAA payments in mind too.
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celia
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Re: Grim Question

Post by celia »

FIREchief wrote: Wed Jun 09, 2021 5:57 pm
munemaker wrote: Wed Jun 09, 2021 6:17 am Do Roth conversions rather than RMDs.
I'm confused. Are you suggesting that a person can choose to Roth convert instead of taking an RMD? Hopefully you're talking about Roth conversions prior to age 72 to reduce the eventual RMDs.
In "early retirement" you are probably under age 72. You might as well do Roth conversions since you will pay the same taxes whether you convert to Roth or withdraw to Taxable. So you might as well keep the asset in Roth, where future growth will be tax-free (preferably in a stock fund/ETF, since it will likely grow faster than a bond funds).

Once you are in the year you turn 72, you have to withdraw an RMD to taxable (or do a Qualified Charitable Contribution). After the RMD is completed, if you want to withdraw more, you can convert to Roth.
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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FIREchief
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Re: Grim Question

Post by FIREchief »

celia wrote: Wed Jun 09, 2021 6:36 pm
FIREchief wrote: Wed Jun 09, 2021 5:57 pm
munemaker wrote: Wed Jun 09, 2021 6:17 am Do Roth conversions rather than RMDs.
I'm confused. Are you suggesting that a person can choose to Roth convert instead of taking an RMD? Hopefully you're talking about Roth conversions prior to age 72 to reduce the eventual RMDs.
In "early retirement" you are probably under age 72. You might as well do Roth conversions since you will pay the same taxes whether you convert to Roth or withdraw to Taxable. So you might as well keep the asset in Roth, where future growth will be tax-free (preferably in a stock fund/ETF, since it will likely grow faster than a bond funds).

Once you are in the year you turn 72, you have to withdraw an RMD to taxable (or do a Qualified Charitable Contribution). After the RMD is completed, if you want to withdraw more, you can convert to Roth.
Yes. I know. Hopefully the other poster(s) know.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
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