Should I convert some of my T-IRA to my ROTH? IRA?

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Retired2
Posts: 76
Joined: Mon Jan 28, 2008 1:44 pm

Should I convert some of my T-IRA to my ROTH? IRA?

Post by Retired2 »

I'm asking the question to see if I am missing anything.

I'm 75, my wife is 64. When I die she'll become the owner of my IRA's.
My view is that at best Federal and State income tax rates will stay the same. Most likely, at my bracket, they will increase. We file MFJ. We're both in good health.

For 2021, our income is:
Social Security $30,000
Pension $15,000
from T-IRA $85,000 (which is 10,000 more than RMD).

My goal is to keep total income below the top of the tax bracket we're in, $172,750 and to be aware of IRMAA, $176,000.

The tax would be paid next year. I could say it is coming out of the taxable social security and pension, but in the end since I'm taking more than the RMD, it's really coming out of the TIRA.

To me, conversion sounds like a good idea. Am I missing anything?

R2
tibbitts
Posts: 23716
Joined: Tue Feb 27, 2007 5:50 pm

Re: Should I convert some of my T-IRA to my ROTH? IRA?

Post by tibbitts »

I don't think you're missing anything, and I'd probably do what you're suggesting, but I'm not sure conversions will make a big difference in your situation.
MrJedi
Posts: 3540
Joined: Wed May 06, 2020 11:42 am

Re: Should I convert some of my T-IRA to my ROTH? IRA?

Post by MrJedi »

Seems like a decent plan considering the ending of the current tax cuts in 2026 and also to help lower RMDs for the potential time that one of you has to start filing single as a survivor.
Davex
Posts: 1
Joined: Fri Aug 06, 2021 12:55 am

Re: Should I convert some of my T-IRA to my ROTH? IRA?

Post by Davex »

Prudent thinking. With the age diff between you and your babe there is good chance of her surviving you for a number of years. She will be facing much lower income brackets for the progressive tax rates. I sense you noticed this. I too am reviewing how much to convert this year for this reason.
Topic Author
Retired2
Posts: 76
Joined: Mon Jan 28, 2008 1:44 pm

Re: Should I convert some of my T-IRA to my ROTH? IRA?

Post by Retired2 »

Thanks for the answers and comments.

I thought about this a little more. Our IRA's are substantial and will have to last through the last survivor's life. The converted amounts will be the final money withdrawn from the ROTH. The last survivor will be on a single tax rate on single tax brackets. Yes, of course, those tax rates will be much higher than what we're paying jointly now.

Right there is reason to convert, not to mention the advantage of being tax free and reduced RMD's.

I needed to post the question and ponder the answers in order to organize my thinking.

Thanks!
ralph124cf
Posts: 2985
Joined: Tue Apr 01, 2014 11:41 am

Re: Should I convert some of my T-IRA to my ROTH? IRA?

Post by ralph124cf »

My only comment is to leave enough in the tax deferred bucket to cover Long Term Care that is not covered by LTC insurance, if you have it. If you have to take money out of tax deferred to cover LTC expenses, then you can also take a tax deduction for these medical expenses (subject to some limits, and according to current law).

Ralph
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