I’m 70 and retired and I am in the 22% tax bracket. I have done well with my investments and I have been educating myself on the benefits off offloading my money from my IRA. Right now, I only have a two year window to covert as much money as I can to my Roth. Most I have listed to say the upped limit of the 24% tax bracket is the “sweet spot” to do the conversion. Since I have such a short window, I am wondering if this is the way to go and take advantage of QCD’s to help minimize taxes.
@SueCascio-v2s4 ай бұрын
I am in the same boat! When RMDs kick in, they are likely going to push me over the threshold for Medicare premiums/IRMAA. Converting now over a several year time period is also going to push me over the threshold.
@zeitgeist88811 ай бұрын
Is there a scenario where you know you will be in a much lower tax bracket in the future yet a Roth conversion is still the best choice? For example current tax bracket 22% and income cut significantly to be in 12% bracket after retirement (or $115k income down to $80k)
@leftysidewinder11 ай бұрын
Problem with Roth conversion at or near retirement age is lack of time and/or financial resources to combat unrecoverable bear market losses held inside Roths. Why risk permanent loss of capital at around age 60 to have tax free growth on your losses that can’t be deducted?
@comingshortly5 ай бұрын
I agree that losses are a big concern and the main reason I am not converting along with the fact that I don’t see RMDs as that overwhelming. If you are 60 today, your first RMD is 15 years away, giving you plenty of time to tax plan without converting and paying tax up front in your highest marginal tax bracket. Even a $5m IRA has a year 1 RMD under $200k. That plus SS in 15 years with inflation seems like a minimum to live on and will not cause unused distributions.
@zackwheat577011 ай бұрын
A sole proprietor saves self-employment tax using a SEP-IRA, then it can be converted to a Roth later.
@davidscott76825 ай бұрын
I am not sure I follow the logic in that statement. Self-employment tax rate is 15.3% on all profits up to $160K+. As an LLC taxed as an SCorp, I pay the same 15.3% (7.65% - employee + 7.65% - employer) on all 401K contributions which is also true about SEP plans. The "Pretax" in pretax retirement funds only refers to federal withholding.
@comingshortly5 ай бұрын
Correct. There is no FICA savings with a SEP IRA. Some states also don’t provide a deduction.
@rickteeden865611 ай бұрын
We were setup to pay a life time of ever increasing taxes. In addition to that, we will forever pay increasing taxes on our social security and increased Medicare Cost. Each time you take a RMD and with its age factor increasing every year, coupled with the growth of your investments, those RMD’s could push you into a higher tax bracket and as noted above, cause more taxes owed and set off the social security and Medicare time bombs. They knew this when they came out with this concept of IRA’s.
@davidscott76825 ай бұрын
401Ks / IRAs replaced pension plans. I have friends that retired at the age of 55 and live very comfortably on their pension plan funds. Retirement plans were designed to grow over time and create an even larger tax base for the government. Roth conversions allows the government to get early large sum payments on that deferred growth. It is all about funding the politician's erratic spending.....go figure
@ach3322Ай бұрын
I wish that this guy talks less. He is using too many words and jargons to explain pretty simple concept.