We have not put money in a Roth for at least 5 years. We started, my wife needed to quit her job and that's when it ended. All totaled about $80K.
I went to the Boglehead search found a WIKI that had websites for Roth conversion calculators and it comes out inconclusive. Schwab's said it wouldn't help and another said it would help in taxes by about $40K. Now I'm not sure if the website is looking at one big conversion or multiple smaller conversions.
I believe my wife and I will stay in the 12%, soon to be 15% tax bracket for a very long time. In 2024 max income before adjustments for 2 people 65 or older is $126,400 and I plan on us living on $96K so we are talking $30K extra. Wife will be taking SS so there's a little wiggle room there, we also have to account for T Bill interest and qualified and non qualified dividends so I'm thinking knock $6K off the top for that.
As far as I know the top of all the tax brackets goes up every year (2023 it was $118,700 for 12%) and it should continue to go up.
I do realize that at some point IF our investments continue to go up we will be in the next tax bracket but the amount we would pay preparing for that may offset the amount of taxes we will actually pay. Assuming that tax brackets and deductions continue to rise paying 22% on $15000 is $3300 and paying taxes now on $30,000 extra withdrawal at 12% is $3600. I have planned for money until 95 but I/we may not be alive to worry about the taxes.
I have watched some videos where Roth conversions don't make sense, is it possible we may be one of those cases?
I went to the Boglehead search found a WIKI that had websites for Roth conversion calculators and it comes out inconclusive. Schwab's said it wouldn't help and another said it would help in taxes by about $40K. Now I'm not sure if the website is looking at one big conversion or multiple smaller conversions.
I believe my wife and I will stay in the 12%, soon to be 15% tax bracket for a very long time. In 2024 max income before adjustments for 2 people 65 or older is $126,400 and I plan on us living on $96K so we are talking $30K extra. Wife will be taking SS so there's a little wiggle room there, we also have to account for T Bill interest and qualified and non qualified dividends so I'm thinking knock $6K off the top for that.
As far as I know the top of all the tax brackets goes up every year (2023 it was $118,700 for 12%) and it should continue to go up.
I do realize that at some point IF our investments continue to go up we will be in the next tax bracket but the amount we would pay preparing for that may offset the amount of taxes we will actually pay. Assuming that tax brackets and deductions continue to rise paying 22% on $15000 is $3300 and paying taxes now on $30,000 extra withdrawal at 12% is $3600. I have planned for money until 95 but I/we may not be alive to worry about the taxes.
I have watched some videos where Roth conversions don't make sense, is it possible we may be one of those cases?
Statistics: Posted by Vinny_in_NJ — Fri Feb 09, 2024 6:53 pm — Replies 6 — Views 558