Very good video. I'm a big fan of the roth ira as well. I like that term roth aholic. The money going to my thrift savings plan, my contributions, are in a roth. I also have a roth ira through schwab.
Unless you have significant income outside your IRA and SS, converting in the 22% and 24% is unlikely to provide a significant benefit (putting aside the widow tax which is a legitimate issue). Example. You are 60 years old with a $1m traditional IRA with income at top of 12% bracket, including cap gains and dividends taxed at zero. Converting $100k today would be taxed at 22% and also cause your cap gains to be taxed at 15%. If you deferred and your taxable account grew to $2m by the time RMDs kick in, your year 1 RMD will be less than $80k. Taking advantage of the standard deduction and low tax brackets, both adjusted annually for inflation, you will pay an average tax as low as 10% on the withdrawal. It does assume you don’t have other income except SS but with 15 years to plan, you have plenty of time to reallocate your money into stocks, municipal bonds, and other investments not taxed annually.
Always pushing the "Professionals" :)
Very good video. I'm a big fan of the roth ira as well. I like that term roth aholic. The money going to my thrift savings plan, my contributions, are in a roth. I also have a roth ira through schwab.
Unless you have significant income outside your IRA and SS, converting in the 22% and 24% is unlikely to provide a significant benefit (putting aside the widow tax which is a legitimate issue). Example. You are 60 years old with a $1m traditional IRA with income at top of 12% bracket, including cap gains and dividends taxed at zero. Converting $100k today would be taxed at 22% and also cause your cap gains to be taxed at 15%. If you deferred and your taxable account grew to $2m by the time RMDs kick in, your year 1 RMD will be less than $80k. Taking advantage of the standard deduction and low tax brackets, both adjusted annually for inflation, you will pay an average tax as low as 10% on the withdrawal. It does assume you don’t have other income except SS but with 15 years to plan, you have plenty of time to reallocate your money into stocks, municipal bonds, and other investments not taxed annually.
I prefer Roth... It's a no brainer to me.