Quote:
Originally Posted by RedChariot
It's that time. I must start to take the RMD. We don't need the additional income yet. Both have defined pensions and Social Security. My options seem to be take the money and place into a taxable fund or withdraw and place in Roth account. CFP states I have to take a large tax hit, but never pay tax again if I transfer to the Roth. It will sit there and grow. CFP is trustworthy and has proven this over the years. Looking to see if others have done the Roth conversion from a traditional IRA. THANKS.
|
.
My view is you are always better off paying taxes later. If you convert your IRA to a Roth and since you state you have a pension, you are likely in a 30% bracket on your last dollars.
Assuming your IRA is 10,000, the true number does not matter
You convert it all and your 10,000 is now 10,000-30%=7,000.
Actually it is worse than that as that 10,000 is added to your taxable income.
You may want to explore leaving your IRA to your heirs as an inherited IRA. They inherit it at it's current value so no one pays tax on the gains. Yes, they will need to take a withdrawal every year-a minor pain but a gift that keeps on giving. The RMD is calculated based on you living to 100. So, there is likely to be a left over balance to use in your will as an inherited IRA.
It is not much money but that is what my mother did for my sister and I.