I am trying to determine if there is any value in converting to a ROTH IRA for me.
I'm retired 5 years (69yr).
I have both a traditional IRA and a smaller Roth IRA.
I have a pension which mostly covers my annual expenses. Dividends and Cap gains from taxable index funds provide the rest.
My income will nearly double in 5 years:
Next yr I will start taking Social Security payments.
In 4 yrs I will need to start RMDs. (Even after converting some to QCDs, I will have add'l income from RMDs)
In the past 3 years I converted some actively managed funds to index funds (taxable account) and so have already triggered the additional Medicare IRMAA.
How do I determine if converting tIRA to ROTH IRA will
1) reduce my future RMDs enough to lower my future tax rates, and
2) reduce my RMD income enough to avoid the higher IRMAA payments?
It seems there are a lot of variable to consider and I'm not sure how to determine. Do I just stay where I am and pay the taxes later?, or if there is a way to pay higher taxes now (to convert to ROTH) in order to pay less taxes in the future.
P.S. I am not concerned with passing on wealth or avoiding tax bills in the next generation (I have no children or spouse, anyone who inherits from me will simply get some $!)
I'm retired 5 years (69yr).
I have both a traditional IRA and a smaller Roth IRA.
I have a pension which mostly covers my annual expenses. Dividends and Cap gains from taxable index funds provide the rest.
My income will nearly double in 5 years:
Next yr I will start taking Social Security payments.
In 4 yrs I will need to start RMDs. (Even after converting some to QCDs, I will have add'l income from RMDs)
In the past 3 years I converted some actively managed funds to index funds (taxable account) and so have already triggered the additional Medicare IRMAA.
How do I determine if converting tIRA to ROTH IRA will
1) reduce my future RMDs enough to lower my future tax rates, and
2) reduce my RMD income enough to avoid the higher IRMAA payments?
It seems there are a lot of variable to consider and I'm not sure how to determine. Do I just stay where I am and pay the taxes later?, or if there is a way to pay higher taxes now (to convert to ROTH) in order to pay less taxes in the future.
P.S. I am not concerned with passing on wealth or avoiding tax bills in the next generation (I have no children or spouse, anyone who inherits from me will simply get some $!)
Statistics: Posted by MyMoney2024 — Wed Jan 01, 2025 11:50 am — Replies 2 — Views 166