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Learning, Sharing, and Teaching => Investor Alley => Topic started by: sb_NoVA on August 14, 2014, 03:25:19 PM

Title: Roth Conversion
Post by: sb_NoVA on August 14, 2014, 03:25:19 PM
Help me help a relative.

He has $30k in 401k, living with children.  His children are wealthy and will support him.  Age 50.  No current income, does not plan to get one either.

Currently the $30k is invested with Vanguard in VTSAX.  He wants to leave it all as inheritance for his grand-kids.  How much should he convert to Roth every year so he can minimize any taxes?  Any other ideas?
Title: Re: Roth Conversion
Post by: Cheddar Stacker on August 14, 2014, 03:28:46 PM
If he is filing a tax return as single, and can claim himself as a dependent*, then he can convert ~$10k/year without paying any federal income taxes. He might have to pay state income taxes, so check local listings. He should be able to do this within 4 years at that rate, and once in the Roth it should grow and pass on to heirs tax free.

* Since his children will support him, they may expect to claim him as a dependent. That would change this scenario a bit.
Title: Re: Roth Conversion
Post by: sb_NoVA on August 17, 2014, 08:53:21 PM
All valuable points.  Thanks.  I have all the considerations I needed to offer valuable advise.

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