Quote:
Originally Posted by dewilson58
Regarding:
Cons
You pay tax on the conversion when you do it—and it could be substantial.
You may not benefit if your tax rate is lower in the future.
You must wait five years to take tax-free withdrawals, even if you’re already age 59½.
Figuring taxes can be complicated if you have other traditional, SEP. or SIMPLE IRAs you're not converting.
Just another view........................not seeing a GREAT advantage of converting to a ROTH.
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Yes, math and full understanding is required.
The taxes can be substantial! They are for us, but as written above, ours would be similar with the RMDs when added to our eventual, likely SS income. Our future tax rate will likely remain high if we did not proceed with conversion.
Regarding that "untouchable for 5 years"...it's 5 years after each conversion year. For example, the amount converted in December 2021 is touchable without penalty in Jan 2026. The date of penalty withdrawals resets to Jan 1 of the year you convert funds. So 2021 conversions available Jan 1, 2026; 2022 conversions available Jan 1 of 2027, etc., regardless of when you did the conversion within that year.
Yes, figuring taxes will be complex, but I've already done some simulations with the 2022 TurboTax. Of course, you can also talk to your tax preparer to see if they comprehend what you are trying to do. If this is all Greek, best to talk to a professional.