Those upper tax limits would change. No way with those upper tax limits seen in the 1981 chart transfer over to 2026. They would not be in the 21% tax bracket for 2026 if only going by those 1981 numbers in the chart. As we know, and I realize it was just an example made by the presenter, those tax rates in 1981 are not the same as 2017. And even if we go back to the 2017 tiers, those upper limits would change.
Why don’t you include in your discussion the impact of the foregone return on the lower investment balance resulting from paying taxes earlier with a Roth conversion?
As you look at the example, the impact of the lower investment amount is overblown. If the tax rates never change then the impact to the account value is exactly the same.
What about investing the RMD that you don't spend in tax exempt municipal bonds? You will not get an S&P 500 return but at 73 do you want that volatility?
Thanks for the comment Dave, if you watch to the end we pull up the chart that is used to calculate how much more Medicare will cost so we totally agree!
Those upper tax limits would change. No way with those upper tax limits seen in the 1981 chart transfer over to 2026. They would not be in the 21% tax bracket for 2026 if only going by those 1981 numbers in the chart. As we know, and I realize it was just an example made by the presenter, those tax rates in 1981 are not the same as 2017. And even if we go back to the 2017 tiers, those upper limits would change.
Great job explaining this!
Why don’t you include in your discussion the impact of the foregone return on the lower investment balance resulting from paying taxes earlier with a Roth conversion?
As you look at the example, the impact of the lower investment amount is overblown. If the tax rates never change then the impact to the account value is exactly the same.
What about investing the RMD that you don't spend in tax exempt municipal bonds? You will not get an S&P 500 return but at 73 do you want that volatility?
Keep in mind that doing withdrawals to convert to ROTH may increase your AGI to the point that Medicare surcharges become a factor.
Thanks for the comment Dave, if you watch to the end we pull up the chart that is used to calculate how much more Medicare will cost so we totally agree!
But certainly withdraw and spend some. Otherwise the RMD on $1.5m is less than $60k.
The answer is no