Quote:
Originally Posted by rsmurano
IMO, the best time to do a Roth conversion is when the stock market/your holdings are down 30-50% then you aren’t paying all the capital gains as you would be paying if the market was high. If we enter a deep recession next year and the market tanks, then it might be right to do it.
Remember there are other issues when doing this conversion. You can’t take any money out of it for 5 years. Also, the income you generate on this conversion you will have to be in that tax bracket for 2 years paying higher Medicare premiums, after 2 years they use your current income.
For me, I would only consider this conversion if I was caught in the stock market and it dropped 50%, and I had enough money in my taxable accounts to hold me over until I can withdraw from the Roth.
Also remember they adjusted the age you have to take rmd out now. I think for me it’s 75 years old. In the next 8 years, they might adjust it even higher
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Respectfully, there is no capital gains considerations in a Roth conversion since the withdrawal from a TIRA is treated as ordinary income.
Also, the 5 year period is only applies to the converted funds, not to the entire Roth balance and the 5 yr count begins on Jan 1 of the year of the conversion. For a Dec, 2022 conversion the year count begins Jan 1, 2022.