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Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Posted: Sun Jul 01, 2018 6:12 pm
by ochotona
I just realized... if I convert my stash to Roth IRA now here in Texas, I can take it to Corrupt and Wasteful States later, and it will be immunized from taxes.

I asked Richard Rosso CFP about whether the Roth exemption is in danger of going away, here's what we wrote me:

RE: What is your assessment of risk to Roths?
Richard Rosso <richardrosso@myclarityfinancial.com>
Today, 1:07 PM

I think they love Roth. Anything to get tax money NOW over later as the government is myopic in focus. If anything I see them attempting to get a hold of tax-deferred money sooner. If they weren’t owned by Wall Street they’d have means tested Social Security a long time ago which would have included sizable balances in traditional IRA accounts.


Richard M. Rosso, MS, CFP®, CIMA©
Director of Financial Planning
Clarity Financial, LLC
11750 Katy Freeway, Suite 840
Energy Tower IV
Houston, TX 77079

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Posted: Mon Jul 02, 2018 8:46 am
by pugchief
ochotona wrote:
Sun Jul 01, 2018 6:12 pm
I just realized... if I convert my stash to Roth IRA now here in Texas, I can take it to Corrupt and Wasteful States later, and it will be immunized from taxes.
LOL. But why would you go from a tax friendly place like TX and go somewhere Corrupt and Wasteful? If I wasn't already in IL [they wrote the manual on waste and corruption] no way would I choose to live here. I'd probably be in TX or FL.

ochotona wrote:
Sun Jul 01, 2018 6:12 pm
If they weren’t owned by Wall Street they’d have means tested Social Security a long time ago which would have included sizable balances in traditional IRA accounts.
This is just scary. Very scary. Sure, penalize people who were responsible. Yet again. >:(

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Posted: Mon Jul 02, 2018 11:00 am
by ochotona
pugchief wrote:
Mon Jul 02, 2018 8:46 am
LOL. But why would you go from a tax friendly place like TX and go somewhere Corrupt and Wasteful? If I wasn't already in IL [they wrote the manual on waste and corruption] no way would I choose to live here. I'd probably be in TX or FL.
Most States have income taxes, only a few don't. To limit relocation choice only to non-income tax States is limiting. I like Texas, but I might not want to spend all of my days here.

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Posted: Mon Jul 02, 2018 12:47 pm
by Desert
Also, sometimes it's cheaper to retire in a state with income tax and lower property tax.

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Posted: Mon Jul 02, 2018 12:50 pm
by pugchief
Desert wrote:
Mon Jul 02, 2018 12:47 pm
Also, sometimes it's cheaper to retire in a state with income tax and lower property tax.
I guess that would depend on your income and home size.

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Posted: Mon Jul 02, 2018 5:22 pm
by Desert
pugchief wrote:
Mon Jul 02, 2018 12:50 pm
Desert wrote:
Mon Jul 02, 2018 12:47 pm
Also, sometimes it's cheaper to retire in a state with income tax and lower property tax.
I guess that would depend on your income and home size.
Yeah.

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Posted: Wed Jul 04, 2018 6:45 am
by ochotona
I'm going to convert up to the TOP of my current 22% tax bracket. In retirement, my income of all sources will put me into the 25% bracket, or maybe in the late 2020s we'll have higher ones.

Also,

Will Congress someday tax Roth IRAs?

https://www.kitces.com/blog/will-congre ... a-promise/

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Posted: Wed Jul 04, 2018 9:40 am
by eufo
ochotona wrote:
Wed Jul 04, 2018 6:45 am
Also,

Will Congress someday tax Roth IRAs?
I think it's only a matter of time. Hopefully it's a LONG time.

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Posted: Wed Jul 04, 2018 11:42 am
by sophie
eufo wrote:
Wed Jul 04, 2018 9:40 am
ochotona wrote:
Wed Jul 04, 2018 6:45 am
Also,

Will Congress someday tax Roth IRAs?
I think it's only a matter of time. Hopefully it's a LONG time.
Say not so....

I think it would be hard to do. What would you tax? Contributions are already taxed. If they decide to tax the gains then there is no difference between a Roth and a taxable account. Worse yet is if they decide to tax gains as ordinary income, which would make Roths WORSE than a taxable account. Effectively that would abolish them.

More likely they'll limit or even eliminate Roth conversions, which would mostly hit high income people doing back door contributions. However, that's if you think Congress would be happy to trade more taxes now/less later for less taxes now/more later. "Later" is not a concept that plays well in Congress, in general.

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Posted: Wed Jul 04, 2018 12:00 pm
by eufo
I'm likely too negative on Congress, but it's in their nature to expand and take. Maybe it won't happen.

Perhaps a prelude to it would be reducing the advantages to a traditional IRA, pushing more people into Roths. Herd people together to do the most damage.

Wow... I'm very negative on Independence Day! Seriously, though, I have a lot of hope for the future, but I'm a natural skeptic to the motives of governments and would put NOTHING past them.

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Posted: Sat Sep 08, 2018 10:01 am
by ochotona
If the Trump 2018 tax cuts are made permanent for individuals, then I may stop or slow my Roth IRA conversions, and my Roth 401(k) contributions. This is now being floated out in the press.

But, there's another way to look at it... more tax cuts now maybe means more tax increases later due to a possible future US debt crisis.

Maybe we should all be tax-agnostic. 1/3 Roth IRA / 401k, 1/3 Traditional IRA / 401k, 1/3 taxable gold and brokerage and bank accounts, oh, and as much I-Bond as you can get.

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Posted: Fri Oct 12, 2018 2:04 pm
by I Shrugged
I am having the same difficulty trying to figure out whether to convert or not. Maybe at least doing it up till a given bracket is filled.

We are already early retired. Income from investments: 200K. Much of which is tax favored in some way or other, so our taxes are usually only 4 figures. In other words, a very low tax bracket.

We have 1.5 million in IRAs, and will have to begin RMD's in 8 & 10 years. And start taking SS. Family histories suggest we could both live another 30 years or more.

The basic question is, do we just continue as is, paying minimal taxes, until we have an explosion of new taxable income at age 70?
Or do we convert to Roth at least up through some tax bracket?

Our CPA is somewhat appalled by that idea. Namely, "Well, you'd be writing a tax check for (big dollars)! That seems like a bad move."

My answer is, "Maybe it is and maybe it isn't. There must be a way to do the math." I mean, it seems like we should at least convert up through a low 20s tax bracket, doesn't it?

I found a website, incomestrategy.com, which purports to do the math. And it seems to, although it is too "black box" for my liking. I have subscribed in order to run the numbers. Their results definitely support ROTH conversion, and deferring SS until age 70. I need to get back on there, then seek some help from them in interpreting the results. They seem to only have (expensive) paid help, not free. But I have a contact at the company, and I think I can ask him in general so I can feel sure that they are considering all of the relevant factors.

Anyway, comments welcome.