We will have a low income tax year in 2024, just some dividends/capital gains, say for purposes of this post less than $40k. Between now and year end I plan to withdraw from trad IRA the amount of the standard deduction for married couple (no itemizing), so about $30k. I think this clearly makes sense because it allows funds to be withdrawn from trad IRA with effectively no federal tax because of standard deduction, and these funds would otherwise get taxed at ordinary income rates. Right?
Assuming this is right, my question is whether adding the funds withdrawn into a Roth account is better than putting in taxable upon withdrawal. I know this has been widely discussed here. In my case, I may not, in fact likely will not, need the withdrawn funds for expenses in 2025, but, I don't know that for sure. It could be that I will want to spend some of that money, depending on how some costs play out in 2025. My thinking is in a case like this, with uncertainty, it is better to do the Roth conversion, put the funds in the Roth, because if I need those funds later in 2025 I can just withdraw with no tax from the Roth, and, if I don't need the funds, long-term better to have in the Roth than taxable. Does this make sense or am I missing something? Thanks for inputs and thoughts.
Assuming this is right, my question is whether adding the funds withdrawn into a Roth account is better than putting in taxable upon withdrawal. I know this has been widely discussed here. In my case, I may not, in fact likely will not, need the withdrawn funds for expenses in 2025, but, I don't know that for sure. It could be that I will want to spend some of that money, depending on how some costs play out in 2025. My thinking is in a case like this, with uncertainty, it is better to do the Roth conversion, put the funds in the Roth, because if I need those funds later in 2025 I can just withdraw with no tax from the Roth, and, if I don't need the funds, long-term better to have in the Roth than taxable. Does this make sense or am I missing something? Thanks for inputs and thoughts.
Statistics: Posted by CloseEnough — Sun Nov 24, 2024 7:05 am — Replies 0 — Views 18