Conversion assuming you have sufficient outside Monies/income to pay for “conversion” related taxes upon such crashes !! Or you have low-growth/stable monies in Tax-deferred, and you DO want to move to aggressive portfolio into Roth via conversion - when equities taken a beating ..RubyTuesday wrote: ↑Sun Jun 20, 2021 6:57 amwolf359 wrote: ↑Mon May 24, 2021 9:49 amWell, I can tell you one known change (and I'm allowed to discuss it because it's in current law!) In 2025, the current low tax rates will expire, and taxes will increase.retired@50 wrote: ↑Mon May 24, 2021 9:18 amIf RMDs don't start for 35 more years, that means you're what, 37 years old?
Given the time frame, frankly, I'd put it out of your mind for at least another 25 years.
There's no telling how many times the laws and/or rules will change between now and then.
Regards,
If you were to choose one time period to conduct Roth conversions, doing so over the next 4 years is probably a good time.
As for the sequence of returns risk, I think people overreact to it. You have to be aware of it and accommodate it. It's not really a risk of failure. It's a likelihood that you'll need to make some changes to your portfolio, spending, or income. If we get a really bad year, well don't do the Roth conversion that year, and cut back on your spending.
If you're a typical Boglehead and built discretionary expenses into your plan, and have backup plans if things go wrong, you're fine. If you're voluntarily retiring early, you're typically doing so with planning. It's the unplanned retirements where you can't earn any more income, had insufficient assets to retire, or otherwise lack financial flexibility that sequence of returns risk is more devastating.
Agree with your post generally, but may disagree with the underlined and bold section. If assets in tax deferred accounts go down 40% would be a great time to convert MORE not less. Let Uncle Sam share your losses and convert.
If you are doing like-to-like assets in both Tras and upon conversion - while needing to do additional withdrawals from traditional to pay for those taxes — especially during distressed markets — conversion may prove to sub-optimal.