I have never done a Roth Conversion, but keep thinking about it.
The question is always, why pay taxes now when that tax money can grow tax free.
And, will you be in a higher or lower tax bracket when you pull it out.
In 2018 we may have a new 12% rate, I expect to be at that rate for any conversions.
I'm 8 years away from RMD's (required minimum distributions), our combined income,
with social security and dividends from VTSAX plus the RMDs could be easily be $100,000+.
I never thought about the RMD's forcing me to take income and pushing me into a higher bracket.
This has pretty well pushed me to think that 2018 is the year to do it.
It's complicated, say I make a $20k conversion, I lose 12%, I can only reinvest $17,600.
If I earn 7.2%, in 10 years 20k will be 40k and 17.6k will be 35.2k.
If I use the 40k at 12%, I pay $4,800 tax I have 35.2k left, exactly break even.
It get better if my tax rate increases after RMDs start.
OK, I'm getting foggy, time for bed.
Any input is appreciated.
Any changes in the tax bill and your thoughts about Roth conversions.