IMO, a lot of information, some good, some not accurate. It doesn’t matter how much you have in taxable accounts, in Roth accounts, in pensions, if you want to save money on future taxes, then all you have to do is determine if cashing out of your ira/401 is beneficial or is it more beneficial to just take RMDs and pay taxes at that point. Also, there is no optimal Roth amount to have, if you have millions in your ira/401ks, then if you were going to do a conversion, then I would convert all of that money now or over time, I wouldn’t stop at 200k.
IMO, you missed out on the optimal time to convert to a Roth, you should have done it in 2020 when everything was down 30+% or more. Now, if your investments are at their peak, it’s the worst time to convert. In 2020, you would have sold all your Ira’s/401ks and paid much less in taxes because your gains would be at their lowest level, then you would have taken this Roth money and rebuy all investments you had before the conversion and then when the “v” shape recovery occurred, you would have recovered very nicely. Now, you will be paying much more taxes since your gains are at their highest and since the market is high, you won’t have the same environment to reinvest your new Roth money to make gains to recover your losses in your conversion, and in todays environment, there is just as much of a chance the market will go lower, which will be a double hit against you.
Also remember, if you open an Roth IRA today, you have the 5 year waiting period.
Any money made during your conversion, goes against your Medicare income and you will be paying much higher Medicare premiums for 2 years. Also, if your spouse happens to be on affordable care act and is subsidized, you will be paying some or all of that subsidize back.
What’s really bad doing a conversion is that you reduce the amount of money in your portfolio to make money in the future.
It doesn’t matter how much you have in your taxable accounts if your goal is to save money on Roth conversions. What matters is how much are your capital gains, dividend income you are getting on your taxable accounts that you are getting taxed on now.
For social security, there are many reasons to consider taking social security now or waiting until you’re 70. If you have to sell investments every month to live on, then taking social security now might make more sense, mainly because you will be in situations that you are selling when your investments are losing money so you have to sell more shares to meet your living needs, and this situation causes you to lose your ability to take advantage of the gains when the market recovers because you sold off more shares. I made buckets to put my money in. While I retired early, I had a bucket of money that I could live on for 2 years without selling any shares, invest this money in money market where they are treated as cash. That bucket got replenished with my taxable account dividends.
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