We are fairly recently retired, and this will be the first year we have zero income from salaries. So, the plan is to do our first Roth conversion. As I started to execute that plan (perhaps a bit late in the year...), some questions arose, and I would appreciate the group's wisdom.
1) Options are to do an in-plan conversion of a portion of my 403(b), or a portion of my wife's IRA, or some of both. We file our taxes as Married Filing Jointly. Are there any tradeoffs or considerations that should shape the decision as to which of those paths to take for the conversion?
2) We both start on Medicare next year, and so want to pay attention to IRMAA brackets as well as tax brackets. To that end, I need to predict our income for all of 2024 in order to determine how much headroom we have within the brackets. The easiest part of this will be looking at the total of our prior and scheduled retirement fund withdrawals. But I am uncertain how to make this prediction for our non-retirement funds. For money market funds, I could sum the values from old statements and readily estimate interest for the remaining months. I don't think money market funds have any special payouts at the end of the calendar year. So, I'll assume that is also pretty easy. But, what about mutual funds (mostly Vanguard and a bit of Janus; mix of index and non-index)? I need to guess on dividends and capital gains (hopefully not short vs long term). Any suggestions on how to proceed (e.g., some algorithm for extrapolating from last year's tax return info)? How do other people do this?
3) I haven't done any calculations to determine if Roth conversions are the optimal path. However, currently only 4% of our total invested assets are in a Roth account. I am making the assumption that diversifying our flavors of money by increasing the percentage in Roth is a reasonable notion. Thoughts?
4) Any other cautionary notes or insights would be appreciated
1) Options are to do an in-plan conversion of a portion of my 403(b), or a portion of my wife's IRA, or some of both. We file our taxes as Married Filing Jointly. Are there any tradeoffs or considerations that should shape the decision as to which of those paths to take for the conversion?
2) We both start on Medicare next year, and so want to pay attention to IRMAA brackets as well as tax brackets. To that end, I need to predict our income for all of 2024 in order to determine how much headroom we have within the brackets. The easiest part of this will be looking at the total of our prior and scheduled retirement fund withdrawals. But I am uncertain how to make this prediction for our non-retirement funds. For money market funds, I could sum the values from old statements and readily estimate interest for the remaining months. I don't think money market funds have any special payouts at the end of the calendar year. So, I'll assume that is also pretty easy. But, what about mutual funds (mostly Vanguard and a bit of Janus; mix of index and non-index)? I need to guess on dividends and capital gains (hopefully not short vs long term). Any suggestions on how to proceed (e.g., some algorithm for extrapolating from last year's tax return info)? How do other people do this?
3) I haven't done any calculations to determine if Roth conversions are the optimal path. However, currently only 4% of our total invested assets are in a Roth account. I am making the assumption that diversifying our flavors of money by increasing the percentage in Roth is a reasonable notion. Thoughts?
4) Any other cautionary notes or insights would be appreciated
Statistics: Posted by PerfectName — Tue Nov 12, 2024 8:32 pm — Replies 4 — Views 399