Roth Conversion Timing and Amounts to Maximize Benefits
I thank everyone in advance for any assistance and advice you can provide regarding my Roth conversion scenario. I am currently 56 with a potential retirement age of 58 (approx. 2 yrs). My wife is younger and will continue working for another 8 years following my retirement. I plan on deferring Social Security as long as possible, age 70. I have $850,000 in a regular IRA and an additional $600,000 in a company sponsored 401K. My wife and I file jointly and are currently in the 24% tax bracket ($206,700- $394,600).
I understand the benefits and general tax implications of a Roth conversion; foremost to pay the IRA conversion tax from a taxable account, not the IRA. In my case, I will cover Roth conversion taxes from selling index funds in a brokerage account. I am looking for clarity on when to start converting my IRA to a Roth. General convention says that you convert when you retire and earn less income. However, I have a wife that will continue working for 8+ years. At my retirement my wife’s salary and my residual income will put us in the 22% tax bracket but very close to the max $206,700 threshold.
Wouldn’t this threshold significantly limit the amount I can convert to a Roth and still stay in the 22% bracket?
As I am already in the 24% bracket, wouldn’t it make sense to start converting now? I would be able to convert about $75,000 in 2025 and still stay in my current 24% tax bracket.
Is there a way to file taxes separately and convert more of the IRA at a lower tax bracket? I don’t think this is an option.
I have listened to podcasts and heard different conversations about the importance of the Right Timing & Right Amounts to maximize the Roth conversion. What am I missing?
Are there advanced Roth conversion calculators that can provide individual conversion timing breakdowns with amounts based on tax brackets and future income?
All comments and assistance are greatly appreciated. Regards, John
I understand the benefits and general tax implications of a Roth conversion; foremost to pay the IRA conversion tax from a taxable account, not the IRA. In my case, I will cover Roth conversion taxes from selling index funds in a brokerage account. I am looking for clarity on when to start converting my IRA to a Roth. General convention says that you convert when you retire and earn less income. However, I have a wife that will continue working for 8+ years. At my retirement my wife’s salary and my residual income will put us in the 22% tax bracket but very close to the max $206,700 threshold.
Wouldn’t this threshold significantly limit the amount I can convert to a Roth and still stay in the 22% bracket?
As I am already in the 24% bracket, wouldn’t it make sense to start converting now? I would be able to convert about $75,000 in 2025 and still stay in my current 24% tax bracket.
Is there a way to file taxes separately and convert more of the IRA at a lower tax bracket? I don’t think this is an option.
I have listened to podcasts and heard different conversations about the importance of the Right Timing & Right Amounts to maximize the Roth conversion. What am I missing?
Are there advanced Roth conversion calculators that can provide individual conversion timing breakdowns with amounts based on tax brackets and future income?
All comments and assistance are greatly appreciated. Regards, John
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