Personal Finance (Not Investing) • Roth Conversion after loss of spouse

I'm guessing that your current target is the top of the 24% tax bracket. If you are 63 years old or older, this will trigger IRMAA when you start Medicare. However, when you quit working, you can apply for a waiver because of the retirement (one of the changes that gets the waiver). So the size of the conversion will become irrelevant because of the retirement.

Excellent. I can't try to plan until I know what all the rules are. I'm loving it here. Thanks (to all!)

Just to be clear, I meant that a conversion at age 63 that would trigger IRMAA at 65 becomes irrelevant if you retire by 65. The waiver will be based on the retirement ( a life qualifying event) regardless of what the income was at 63.

I did not mean to imply that you can continue large conversions after retirement....those could trigger IRMAA and without another life changing event, you will have to pay IRMAA and it may or may not be worth it. (To be determined later.)

About paying IRMAA, none of us, even those who are paying the full IRMAA ride, are paying the full cost of our health insurance. It is still a bargain even if you do have to pay some extra. Remember that there is no charge at all for Medicare part A (hospitalization insurance). So try not to groan too much if you end up paying a little IRMAA if you find you need to convert more when you are older.

The 24% bracket is where I am at present; ideally anything I do doesn't put me over that. The effective tax rate is a lot less (note to self for future conversions, if any) so distribution to cover taxes or estimated taxes can be less than 24%.

But....it appears (to me anyway) the entire conversion will be taxed at 24% so you may need to withhold or pay more than your overall effective rate. If you meant the effective rate for just the conversion....yes.

This is why I've started using the "last year's tax liability" for my safe harbor. It is closer to idiot proof and the older I get, the more I need things like taxes to be idiot proof.

I opened my first Roth IRA in 1999, just 2k.

This (combined with your age) means that your Roth IRA is "qualified". There are no more penalties. There are no more taxes. Any money you take out of Roth IRA is tax and penalty free forever.

Q] Since I'm over 59.5, does the just completed rollover have its own 5 year clock? My understanding is yes, but Fidelity insisted it does't because of the Roth I opened last century and my age.

Fidelity is correct.

You do not need to keep your ancient Roth IRA. Consolidate it. Just keep some record that it existed more than 5 years ago. You will almost certainly never be asked to proved your Roth IRA is a certain age, but a simple 5498 or Roth IRA statement would do the job if required.

Statistics: Posted by retiredjg — Fri Dec 29, 2023 4:41 pm — Replies 34 — Views 1978

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