In a similar "calculator" mode for a Roth conversion right now. I have ZERO W2 income and am married. Neither of us on social security. Here are my thoughts for a 100% tax-free IRA -> Roth conversion:
Max out HSA with single contribution: $9550 (family w/$1000 catch-up)
Take standard deduction for my spouse and myself: $30,000
So, I can "safely" move $39,550 at ZERO tax, right?
That leaves me with:
* 10% tax bracket on next $23,850 of rollover ($2385 tax)
* 12% tax bracket on next $73,100 of rollover ($8772 tax)
Combined, you get an $11,157 tax on $96,950 -- overall, an 11.5% tax rate to convert all those IRA funds for tax-free income of the funds, which are all positioned in income-producing positions.
So, if you add in the $39,500 tax-free conversion, we're going to convert a total of $136,450 IRA to Roth with only $11,157 in taxes. If my calculations are correct, that's, ultimately, a 8.18% tax on the total conversion. Right?
Please chime in if I have something wrong here. I've run this past my tax guy, but my confidence in him has waned in recent years, as he's further down the aging path than I at this point.
Go!!
|