Last Roth IRA conversion

[wcinewbie]

Super helpful thus far! I didn't think about the tax brackets at all and it's obviously a very important part of the equation. Am I reading correctly though that we don't need to worry about converting pretax 401K to roth IRA thus yet and this won't come into play until 2032? Is it still advantageous at this time to convert any of it into our roth? If I recall correctly, we typically don't get our W2's until the beginning of next year so we'll likely have to do a little bit of guessing as far as estimating our taxable income before we decide how much to roll over. We typically get the standard deduction. As we bought our first home and had our first child, are we likely to be itemizing? Again, this is hopefully the lowest income we'll have during our working career.

[Tim]

Then again. If I retire and don't take pensions. Reportable income will be zero, right?

So pull out say 350k yearly will be allowed to stay under 450k limit. This will be allowed with BBB still, right?

Is the spouse boycotting employment too? Just a minor factor. I recommend asking permission rather than asking for forgiveness later.

[JBME]

Then again. If I retire and don't take pensions. Reportable income will be zero, right?

So pull out say 350k yearly will be allowed to stay under 450k limit. This will be allowed with BBB still, right?

right. this whole thing is not the end of the world if the plan had been to do roth conversions in early retirement. Most probably weren't going to convert something like $400k from pre-tax to Roth in a single year anyway. Roth conversions are totally allowed, knowing that the amount converted is reportable income, and the conversions aren't allowed if reportable income is above $400/$450. If your retirement expenses are $100k and the 24% bracket is still $325k MFJ, you can convert $350k while withdrawing $100k for expenses, if you want, though I'd personally only convert $225k because I don't think it's wise to convert at 32%

[StarTrekDoc]

Then again. If I retire and don't take pensions. Reportable income will be zero, right?

So pull out say 350k yearly will be allowed to stay under 450k limit. This will be allowed with BBB still, right?

[StarTrekDoc]

My plans were to retire in 2034. Perhaps pull earlier and convert to Roth . Now that's tail wagging the dog 🤪.

[spiritrider]

The proposed prohibitions scheduled to go into effect on 1/1/2022 only apply to Roth conversions of after-tax balances. The proposed prohibitions of Roth conversions of pre-tax balances is only on incomes > $400K/$450K S/MFJ and doesn't take effect until 2032.

[JBME]

what state are you in now? the answer to your question is it depends on what your marginal rate is now and what it will be in retirement. It's impossible to know the latter. But if I were you I'd think about converting enough up to the top of the 24% federal bracket, but I might decide against if you live in a high income tax state

[wcinewbie]

It looks like there's a very good chance this will be our last year doing the backdoor Roth IRA. We plan to contribute the maximum to our IRA then convert this Roth this year. We have a fair amount of money in 401K's that can be rolled out.

What is the optimum amount to roll out? What factors should we consider and how do these things come into play in determining the amount?

We're currently in our lowest expected annual income since training but expect to increase significantly over the next few years. ($300k this year with a job change and parental leave). We just bought a home. We had our first child. We plan to retire by age 60 or earlier (currently late 30's). We may move back to California after retirement depending upon where our family's out and how much money we've saved.