Quote:
Originally Posted by Boilerman
But there are several reasons for doing Roth conversions besides avoiding IRMAA. Like being pushed into higher tax brackets. Or being subject to NIT. Or the risk that tax rates will be higher in the future than today’s rates. Or the risk that Social Security benefits might be means tested in the future. Or the psychological benefit of having tax free money to spend from a Roth (my parents refuse to spend their IRA money because of the taxes they would pay.) I’ll say that all these reasons mostly apply to large IRAs, but I don’t agree that $3M is the threshold.
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This is exactly correct. I don't have a major issue with the OPs original analysis, but it was narrowly defined for one scenario while there are other factors and scenarios where Roth conversions make perfect sense. One common error I see often is analysis is done for a couple but the ramifications when one passes is never considered.
To @Boilerman comment about tax rates being higher, we know this is a certainty if the TCJA isn't extended at the end of 2025. In my case, my top tax rate will rise by 9% in 2026. Not taking that into consideration in considering Roth conversions is crazy.