Should I do a Roth Conversion?
I’ve always wondered if I should convert my IRA or my 401k into a Roth IRA.
The key variable in this “what if” analysis is what tax bracket will you be in the future compared to now. Â Recognize that tax laws can change.
Article quantifies benefit for each tax bracket
http://www.schwab.com/public/schwab/nn/articles/Roth-IRA-Conversion-Look-Before-You-Leap
Conclusion: Note that you must pay the tax from a different source. Â If you pay the tax from your IRA or 401 account you will never come out ahead. Â However if you pay the taxes due from some other account, and you expect to be in a lower tax bracket you could benefit. If you stay in the same bracket, you only “might” benefit from conversion.
http://taxfoundation.org/article/2016-tax-brackets
10% – $18,550
15% – $75,300
25% – $151,900
Remember, when you convert, it could push you into a higher bracket for that year.
Standard deduction and personal exemption – $12,600 married in 2016. (If neither is 65.)
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