Roth Conversion

[cool7hand]

Similar to BillyBGood, my wife and I are thinking about a Roth Conversion for 2019. Does anyone have recommendations for trusted reading? A trusted calculator? Any help would be most appreciated!!

[MDM]

There's Traditional versus Roth and Roth IRA conversion for many details.

If you are looking to understand your marginal rates as a function of conversion amount, there's the case study spreadsheet.

Do those suffice or is there something else you seek?

[Trudie]

Follow the links to the Mad FIentist.  He has some great advice about Roth Conversions.

[cool7hand]

My mistake! I should have been more clear.

I am asking about a calculator to figure out when it is tax advantageous to convert from a traditional IRA to a Roth IRA based on: (1) current tax rate; (2) future tax rate; (3) anticipated rate of return; and (4) time horizon before harvesting the funds for expenses.

Is there a calculator that helps with this?

Thanks!

[MDM]

My mistake! I should have been more clear.

I am asking about a calculator to figure out when it is tax advantageous to convert from a traditional IRA to a Roth IRA based on: (1) current tax rate; (2) future tax rate; (3) anticipated rate of return; and (4) time horizon before harvesting the funds for expenses.

Is there a calculator that helps with this?

Thanks!

All you need to know (or estimate) is (1) current marginal tax rate, and (2) future marginal tax rate.  You might use (3) and (4) to help estimate (2), but in the end it's (1) and (2) that matter.

See the things I linked previously for more details.  If questions remain after you have looked at those, ask away!

[cool7hand]

I feel like an idiot. I'm not understanding. Our current tax rate is 12%. Our future tax rate will be 12% or higher. What do we do next? Sorry I'm so slow with this!

[MDM]

I feel like an idiot. I'm not understanding. Our current tax rate is 12%. Our future tax rate will be 12% or higher. What do we do next? Sorry I'm so slow with this!

Have you read Traditional versus Roth - Bogleheads, at least through the "Simplest situation" section?  Can you summarize how it suggests you decide?

[cool7hand]

Thanks. That was helpful!

Given that my wife and I will have a few years of low income now and will be in the 12% bracket, and given that we either will be in the same bracket or a higher bracket when we need to harvest the IRA money, and given that growth is a constant and what matters is the tax rate, we should convert as much as we can now while we remain in the 12% bracket.

Does that all sound right?

[MDM]

Thanks. That was helpful!

Given that my wife and I will have a few years of low income now and will be in the 12% bracket, and given that we either will be in the same bracket or a higher bracket when we need to harvest the IRA money, and given that growth is a constant and what matters is the tax rate, we should convert as much as we can now while we remain in the 12% bracket.

Does that all sound right?

Sure does!