We’ve improved the functionality of the Roth Conversion Explorer
What are the benefits of this feature enhancement?
While Roth conversions are an excellent way to manage your lifetime taxes (and potentially that of your heirs), there are times when you may want to avoid conversions. Our new feature gives you greater control over the timing of Roth Conversions suggested in the Roth Conversion Explorer.
Add a start age if if you want to delay Roth conversions until a specific age. A few times you may want to do this are:
If you are currently in a high tax bracket and expect to be in a lower bracket in the future.
If you do not have sufficient funds outside of the IRA to cover the taxes.
If you are not yet age 59.5 and want to avoid early withdrawal penalties.
If you are not yet age 59.5 and plan to rely on a Marketplace health plan. Keeping your AGI low can help you to qualify for Premium Tax Credits.
Add a stop age if you want to end Roth conversions at a specific age. A few times you may want to do this are:
If you’re already receiving or plan to begin Social Security benefits, Roth conversions can increase taxable income, making a higher percentage of your benefits subject to taxation.
When you begin taking Required Minimum Distributions. Roth conversions increase your taxable income, and may potentially push you into a higher bracket while you are also taking RMDs.
Before expected tax law changes. If tax rates are expected to rise due to legislative changes or personal circumstances, converting earlier may save taxes in the long run.
If you find yourself needing cash for unexpected expenses. The additional tax liability from conversions could strain your finances.