I don’t get it, people doing the conversion so they don’t have RMDs! How does this make sense? Instead of withdrawing a small portion of your nest egg with your portfolio at its highest value, you would rather pay high taxes now and then decrease your portfolio drastically to pay taxes, now you are making much less every year because your investment value has decreased greatly.
Also remember, when you withdraw an RMD, most of this money is available for you to spend or reinvest, you are only paying taxes on this RMD amount.
1 more thing, when you hire an advisor to ask for his/her advice on doing a conversion, or if you are making the decision yourself, what is the hypothetical rate of return are you using? If you are comfortable in your investing and don’t want to take a little risk, you are probably happy with 4-5%, then I wouldn’t convert because you will never recover your loss in the taxes you paid. My hypothetical rate of return is over 20+%, I would be able to overcome the deduction in taxes in gains over the long haul, and I still don’t think it’s smart for me to do this.
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