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A lot of advise I see about whether someone should convert non ROTH money to ROTH money always brings up what your current tax rate is verse what your tax rate will be in retirement. I would think the main deciding factor would be the tax savings on the earnings of the converted ROTH. Especially if there is 20 or 30 years of earnings. I am seeking to do my own conversion. Currently in the 25 or 28 percent tax bracket. This is more of an observation than a question.
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Another advantage is that Roth has no required minimum distribution when you hit 70.5.
Also, I think there's no estate tax on Roth, so the benefits continues even after you die.
I'm just waiting for my income to go down and convert at least some. Didn't plan ahead well enough for this; but one of these years! -
As pointed out, Roth gives you flexibility when you are withdrawing money. I would hate to needs lots of money one year and be pushed into uber high tax rates because I pulled out more that year.
Since I am always going to be stuck with moderately high marginal tax rates going forward (due to a pension) I am adding as much as I can to Roth money going forward as long as doing so doesn't affect my lifestyle. My 457 plan has a Roth option, so I'm adding in to the Roth part what I can.Don't torture yourself, thats what I'm here for.Comment
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You need to run numbers and see where you income is when you convert because it could be too much of a tax hit. We're converting this year because our income dropped from not working last year and this year. Then we won't do it again.Comment
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It's not. Do the math to see. If your pre-retirement tax rate is the same as your post-retirement rate then the after-tax values of equivalently invested traditional and Roth IRAs are exactly equal.Originally posted by Atretes1 View PostComment
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Good catch.
When I first read it, I just assumed the usual high tax now, low tax retired; but re-reading the OP, it actually ignored the tax rate.Comment
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