We likely have an era of low-income tax rates at least until 12/31/2025.
This flow chart might help you think about some of the considerations. This isn’t designed to be an end all be all, so your results may vary.
Before making any moves check with your CPA to make sure your estimates are correct, and there aren’t any unintentional consequences.
- Do you have an after-tax IRA, 401k, 403b, or other pre-tax retirement plans?
If yes keep going down the list, if no, stop.
Is your marginal Federal Tax bracket likely to be 24% or below this year (2018 rates below)?
If yes keep going, if no, stop.
Is your marginal Federal Tax bracket likely to be the same or higher than 24% in 2026 and beyond? (2017 rates below)
If yes keep going, if no, stop.
(image source Bob Keebler)
- Do you have outside assets to pay for the taxes on the conversion?
If yes keep going, if no, stop.
Are your beneficiaries family or friends, and not charity?
If yes keep going, if no, stop.
Has your CPA approved of the impact of the conversion to your tax bracket, Medicare premiums, state income tax brackets
If so, it might be a wise thing to maximize the after-tax dollars available to your and your family.
“It's Not What You Make,
It's What You Keep That Matters”
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Thanks for taking a look!
Tom Gartner, MSAPM, CFP®
This article represents opinions of the authors and not those of their firm and are subject to change from time to time, and do not constitute a recommendation to purchase and sale any security nor to engage in any particular investment or legal strategy. The information contained here has been obtained from sources believed to be reliable but cannot be guaranteed for accuracy.