Quote:
Originally Posted by petsetc
An unsolicited suggestion
For those of you who either have not yet started drawing Social Security or are in a low tax bracket, you should consider doing a Roth conversion to minimize future tax liability.
If you are already drawing Social Security, remember that a Roth conversion increases your income and therefore will increase the portion of Social Security that is taxed.
Why do a Roth conversion?
Because there is a good chance that taxes will be higher in the future …
Because once converted, the money grows tax free …
Because distribution to heirs is tax free to them …
Because ...
I use the prior year’s Turbo Tax to do a mock-up to evaluate whether and how much to convert – based on how much more I’m willing to pay in taxes.
I wish I had been more aggressive in doing conversions prior to taking Social Security.
Important - Roth conversions must be completed prior to the end of the calendar year.
JMHO
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All very good points, but also consider that if you aren’t yet eligible for Medicare and are getting health care through Obamacare, converting to a Roth will increase your income and could either reduce, or whip out, any tax credits you get toward your health insurance.