Is 70 Too Late for a Roth Conversion?

[@maigoff5725]

If I convert some of my traditional IRA, it will make my yearly income higher, therefore I have to pay a higher premium for my Medicare. If I wait until I am 73, I have to withdraw 4% RMD, it will make my income very high and my tax bracket will be higher, then my Medicare premium will be higher. What do you think?

[@M_B_24]

What if someone is retired-no Roth account-but an IRA-can they open a Roth and do conversions?

[@justmyopinion4now]

My question as well.

[@voncilledemesa2075]

Even if you're not working, you can open a Roth IRA account. Although you can't make a direct contribution to a Roth without earned income, you can convert a traditional IRA, 401 (k) or similar retirement account into a Roth.

[@leftysidewinder]

Looks like the retiree already won the investing game. No reason to lock up the traditional funds for a minimum 5 years on Roth growth through roth conversion at 70. Pay the tax, take the profit, and spend it or reinvest into a taxable brokerage where it then becomes totally liquid and you can take a tax loss if need be, whereas in a Roth, the losses are not deductible.

[@daveschmarder-1950]

I've already done my RMD. I started my QCD. When I know what the fund distributions in my taxable account are, I may do a Roth conversion. I'll be in the 12% bracket no matter what. BTW, my state doesn't tax my IRA distributions up to a certain amount. I expect my net tax cost to be about 6% of this conversion. My IRA isn't that large, so this conversion would be used to save my rich relatives taxes.

[@1ael346]

Converting in your 70's not only do you have to worry about Irma, but you could put your social security to be taxed at 50 to 85%. My plan is to convert everything before 63, which is when Irma is judged before you get on medicare. Plus if your prvisional income and 1/2 your social security = less then $25k a year , and your single, you pay no tax. You could have millions inside your roth, it doesn't count towards your income. That's my plan. The power of zero!

[@markkile8215]

As a CPA, I am not a fan of the Roth conversions, to buy into a Roth you have to assume your marginal tax rate will be going up when you are retired from what it is when you are still working. This is backwards most all the time, If you convert to a Roth then you are paying tax for the year of conversion. Most affluent people die with a good portion of their IRA balance and the thought of converting so your kids don’t have to pay tax on an inherited IRA is Foolish!

[@kellycarter8082]

Tax professional for over 35 years. You can’t make a blanket statement like you do - You can only do this by running the numbers and seeing what will happen in every individual case considering their health, Traditional IRA balances and their individual RMD amounts, and how kids may be taxed among other things, their age when they are converting, and other factors. The video has good ideas of what to think about. You are giving bad advice about this being Foolish because you can’t have all the scenarios run out.

[@keithmcphail1152]

That was pretty fast. Maybe too fast I didn't hear you mention that the recovery of the new Roth IRA to previous 401K IRA levels takes years. And if you are 70 now, it's unlikely that you will gain back the tax cost until a ~decade later. There needs to be a more realistic past of this rushed talk. A lot of people don't have 1.5 / 2M dollars in a 401K and can afford to live off of the reduced 401K after the conversion.

[@liammclaughlin2881]

Conversion doesn't make sense. First of all they said they don't really need the money so leaving it earning tax free growth makes sense. He keeps talking about a 25 or 28% tax bracket. The tax brackets go from 22 to 24 to 32%. There is no 25 or 28% bracket. He forgets to mention one important item and that is the 5 year waiting period on roth conversions. You have to wait 5 years before you can withdraw any growth moeny from your Roth conversion. The simple asnwer is 70 is too late. All the more reason to avoid financial planners.

[@jimselvy6157]

There is no 5 year waiting period for Roth conversions after age 59 1/2 assuming you had a Roth account more than 5 years (conversion and initial Roth account 5 year rules are different). See Figure 2-1 in IRS Publication 590-B www.irs.gov/publications/p590b You are correct in 2024 there is no 25% tax bracket (10, 12, 25, 24, 32, 35, 36). But unless something happens for tax year 2026 it is untrue (10, 15, 25, 28, 33, 35, 39.6).