Will a Traditional IRA contribution offset some of a Roth Conversion?

[bhowes]

Hi there!

About 6 years ago (before I even knew the difference between a Roth and Traditional IRA), a good friend set up a Traditional IRA for me to start saving for retirement. Now that I realize the benefits of a Roth IRA and I expect to be in a higher tax bracket come retirement time, I would like to convert this Traditional over to a Roth.
For 2016, I contributed $5500 to the Traditional IRA.
There is a total of $24000 in the Traditional IRA account.

Our joint annual income totals to $125,000 - $135,000 each year.
Would you suggest that we slowly move small portions of the Traditional IRA over each year? We definitely don't want to breech the $153,100 amount and be pushed into the next tax bracket.

And would the $5500 contribution to the Traditional IRA at least offset a $5500 conversion to a Roth IRA for this year?
Any suggestions or advice would be greatly appreciated!

bhowes,
Boulder, Colorado

[moof]

Not sure of your full situation, but converting to a Roth while still working/accumulating is generally a bad idea.  If you can stash anything into a traditional IRA, max that out before any Roth contributions.

Putting money into a Roth today locks in taxes, and nets you tax free growth down the road (so you lock in your 25% or so tax bracket FOREVER).  Traditional IRA avoids a bunch of income taxes today and you might have to pay some taxes later when you take them back out.  For a modest retirement you will be in a lower tax bracket, and upwards of 30-40k of the first money you take out will be tax free.  So much of your traditional IRA money will go in and come out tax free.

So unless you are pretty sure your Roth withdrawals will be during a time when you are in a HIGHER tax bracket than today, they should be avoided.