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progree

(11,812 posts)
5. I don't think so. I converted $60,000 one year, and $50,000 a couple other years
Mon Aug 10, 2020, 12:48 PM
Aug 2020

Only caution is to be aware that a large conversion can put you in a higher tax bracket -- the piece that gets taxed at a higher tax bracket would likely be a mistake if you expect to be in a lower tax bracket than that in some future year where you'd be doing RMD or other withdrawals from the traditional IRA that you converted.

In other words say you are in the 12% tax bracket and you convert a big amount such that it pushes you into the 22% tax bracket. Say that $10,000 of the conversion is actually taxed at 22%, and you pay $2200 in taxes to the federales on that portion.

Had you not converted that last $10,000, it would remain in your traditional IRA. If you withdraw that $10,000 from your traditional IRA in years when you are in the 12% tax bracket, the tax bill would be $1200.

I left out that the tax bill in the leave-it-in-the traditional IRA approach will be higher due to growth of the investment...

But consider that the amount of taxes you paid now on the conversion is gone forever and is not growing, not compounding...

anyway its complicated and there are a lot of Roth conversion calculators out there that one should very definitely check with

I left out Aunt Minne's share (Minnesota)

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