I'm not sure I understand your question.smitcat wrote: ↑Mon Sep 13, 2021 7:37 amAgreed on all points , here is one that you said that caught my eye....Lee_WSP wrote: ↑Sun Sep 12, 2021 10:30 amAs I stated earlier, there are other reasons to convert/have a Roth account. I'm just pointing out that failure to convert will not tank anyone's retirement. But it's still beneficial in nearly every case to convert up to one's income threshold during retirement start to RMD year.smitcat wrote: ↑Sun Sep 12, 2021 7:48 amWhat would happen in those funds were earmarked for heirs which would drive them into a high Fed plus state tax rate?Lee_WSP wrote: ↑Sat Sep 11, 2021 12:21 pmIt also shows you/us the marginality of the conversion choice for most people. Even if we take his example as correct (we should, you'd just have to adjust the theoretical pension up by 30k or so), only the income above the 32% threshold would be taxed at 32%. The vast majority of her income would still be taxed at the lower bracket.wrongfunds wrote: ↑Thu Sep 09, 2021 6:08 pm
If such a prominent person can give this as rationale for choosing the Roth conversion, how would you and I be able to resist their (flawed) logic?
(taken from https://www.kitces.com/blog/navigating- ... nversions/ )
So it's really just $10,000 per year taxed at an extra 8%, for a less than jaw dropping benefit of $800/$10,000 taxed at the higher rate.
In most cases, they would be no better or worse off than you and they'd have an extra 10 years to make withdrawals and spread out the tax.
If you're somehow able to time your demise perfectly, they'd be able to spread it out right after they FIRE or retire.
If you don't time it perfectly, the absolute worst case scenario is that it's taxed at the highest bracket.
Plus at least five other scenarios within the realm of a normal probability distribution.
All reasons to consult an estate planner because you never know when you're going to die.
"If you don't time it perfectly, the absolute worst case scenario is that it's taxed at the highest bracket."
What are your thoughts about these?....
1. If many/most Bogles are typically planning for roughly a 4% draw (for 30 years) or less
2. And if historically those draw rates have had a 95+% success rate
3. And those 95+% success rate runs contain many which end up with mutiples of the starting value
Then what would the results be with Roth conversions up to ones income threshold between the 'worst' case and the 'best' case?
From an estate planning perspective a Roth dollar is vastly superior to a tax deferred dollar. From a retiree's perspective, the Roth dollar is more valuable, but it costs more; sometimes significantly more. However, the ratio of Roth:TDA is not going to sink or float your retirement plan.
Having too much tax deferred dollars will make certain estate plans extremely costly. The simplest scenario is if you have a spendthrift or too young to trust heir inherit a significant amount of tax deferred dollars. Such an account is typically sent to a discretionary trust where the retained distributions are taxed at the highest income brackets. See the below link and multiply each bracket by 10x if you want to get an idea of the size of the account and what it might be taxed at.
https://www.greensfelder.com/trusts-and ... mounts-for