Quote:
Originally Posted by retiredguy123
My advice about Roth conversions is to don't do it.
|
There are several variables to consider:
First, what is
your reason for creating a Roth?
* Reduce potential RMD?
* Reduce income taxes to heirs?
* Reduce future income taxes?
* Single or married makes a big difference. .
These strategies are straight up
tax minimization strategies, and as the IRA gets larger:
* there is a level below which a Roth won't make much of a difference
* there is a level which a Roth can be very beneficial
* there is a level above which a Roth isn't worth the taxes paid.
The biggest determinate are:
* size of your taxable investment account
* size of your annual living expenses
Spending above your Social Security and pension totals have to be funded from somewhere. Typical example:
If you live with no savings after SS and pension totals, how will you pay for a new car or a new roof to keep insurance?
* more IRA?
* some taxable investments?
* some ROTH?
That's how to think about a ROTH vs taxable investments vs IRA
and yes, you
may have to pay some taxes on the investment account but taxes are a measure of success, the more successful, the more taxes. . and if you fear paying more taxes, you will seldom build substantial wealth. AND there are investment tax minimization strategies for taxable accounts.
YMMV
