Thank you for the reply.
In the real world, of course I would account for inflation. Let's use your $24K number for the purposes of discussion.
If the appeal of the Roth pipeline is that I avoid the 10% extra tax, great. But I don't read the tax rules that way. Here's my logic, help me see what's missing. I'm referring to IRS publication 590 pages 70 and 71. Here's the link:
http://www.irs.gov/pub/irs-pdf/p590.pdf.
1. The withdrawal of the $24K in five years from now would not be a qualified distribution because it doesn't meet condition 2 on page 70 left side, and in order to be a qualified distribution it would have to meet both conditions 1 and 2.
2. Third paragraph second column page 70 states: "Unless one of the exceptions listed later applies, you
must pay the additional tax on the portion of the distribution attributable to the part of the conversion or rollover contribution that you had to include in income because of the conversion or rollover." I read this to mean that since I had to include the $24K in income because of the conversion when I was 45, I must pay the additional tax unless one of the exemptions applies.
3. Since none of the exemptions apply (first home, disabled, etc.), I must pay the additional tax.
Where is my logic wrong or where do we disagree on the interpretation of the rules?