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IRA to Roth conversion in retirement

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  • IRA to Roth conversion in retirement

    I am a married retired physician planning to do a multi-year IRA to Roth conversion. The IRA to Roth conversion will reduce our estate taxes and reduce the taxes paid by our heirs even if the stretch IRA provision changes to a 5 year withdrawal. Our plan has been to do a significant amount of the conversion during the years prior to starting social security at age 70 and RMDs at age 70 1/2.  We recently used then Optimal Retirement Planner an online program that assesses the financial consequences of Roth conversions. The program recommends a relatively equal amount yearly conversion.

    Our marginal tax rate at conversion would be the same with either approach. My thought is to go ahead and front-load the conversions since an increase in tax bracket will likely occur with the passing of the first spouse so best to convert as much as possible at current marginal tax rate.  Comments and suggestions are appreciated.

  • #2
    Given your information, recommend you front load not only for the reason you cited but also to start the tax-free Roth growth asap. Be sure you have an appropriately-diversified equity mutual fund/ETF portfolio, properly managed (rebalanced annually, nothing in the stock market that you will need w/I the next 5 years).

    Even better, convert all in the next bear market or chunks in corrections as they occur. I have a good example in my financial guide for established attendings/pre-retirement or you can run the numbers yourself based on any period in history since Roths came into law.

    Also recommend you read Nick Murray's Simple Wealth, Inevitable Wealth.
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


    • #3
      Thanks for input. Overall looks best to do early as much of the conversion as feasible.