The Tax Bracket You MUST AVOID (When Doing Roth Conversion)

In this interview with Mark Byelich, we discuss the tax bracket you need to avoid when doing a Roth conversion, my favorite tax bracket and the best way to pay taxes on your Roth conversion.

0:27 Intro
2:38 Taking Advantage of Low Tax Rates
4:05 My Favorite Tax Bracket
5:44 50 Percent Tax Rates
7:56 Icelandic Tax Rates Comparison
9:53 My Least Favorite Tax Bracket
11:47 Paying Taxes on a Roth Conversion
12:37 Conclusion

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[Tom-PlaylistKing-Smith]

8:20 answers the question: The Tax Bracket You MUST AVOID (When Doing Roth Conversion). Get to the point. Our time is valuable!

[srconrad]

Thank you for this. It reaffirms my thinking. Just retired in 2023 and was planning on utilizing up to the 24% tax bracket for Roth conversions in 2024. I’m single so it’s even more important to get that extra amount converted. It’s almost double from the 22% bracket.

[markbyelichcfp]

Thank you Dave, it’s always great seeing you and sharing our passion for tax-efficient planning.

[dancurran]

Thanks for the video. I barely dipped my toe into the 22% tax bracket during my working days but I would get walloped during my upcoming RMD days. I am delaying Social Security to get my Roth conversions done.

[tncoltsfan]

The 24% bracket gets you into IRMAA penalty, why no mention of it?

[jws]

The missing piece of which you did not speak is if one is on Medicare the cost of this coverage MUST be considered, not just what tax bracket one is or will be in. I am presently juggling (literally) these variables right now.
It is not easy and one has to buy in to your assumptions or predictions knowing you could be wrong and it will cost you a lot of money.

[frankish]

Its had to say goodbye to $23.5k in ACA subsidy though! Bird in the hand being worth 2 in the bush. Oh and the 9% Oregon State income tax.

[miketracy]

Good advice but it only works in the 9 Conservative, income-tax-free states.
In MN if we are at the 24% IRS rate, we are then forced to pay 8% MN income tax, so that
puts us up to 32%,
Any wonder why so many retired MN residents are moving from this Socialist Utopia?

[jillponce]

Yikes, we are already in the 32% tax bracket now, with a sizable 403b and 401K and no Roths

[jimdavis]

The bottom line question after all is said is "will the conversion allow you to pay a future "total" lower tax bill.

[richardlau]

Thanks for the information. Why do you think the tax cuts will be extended for another 8 years?

[jewels]

What if you're in the 12% tax bracket?

[mikeng]

Except the EFFECTIVE rate goes up from 14.7% to 18.7% when converting up to the max ($369, 600). Not that I disagree with you but you will pay 4% more tax on the amount you convert. No?

[lidarman]

How is the average middle class American going to end up in the 40% bracket when nobody seems to be saving enough in their 401ks?...otherwise, sound advice on the conversion stuff.

[ppumpkin]

I have a six figure pension that puts me in a higher tax bracket. It doesn't have a survivor benefit, so when I die my wife's sole support will be IRA distributions (about 1.5 million) and her social security. So I'm thinking if she survives me, she'll be paying a much lower tax rate, that I will be paying if I convert to a Roth now.

[mapsandglobespro]

With the goal of converting, say an annuity that has matured past the penalty period, does it make sense to transfer the annuity back into a managed account that is also a tax deferred account, to take advantage of the conversion or could I just take a percentage each year from the annuity and do the conversion?

[denny]

Show us on paper. Do the calculations. Show us the spreadsheets. Take the guessing out of it . Please show us a software package that will optimize our Roth conversions. How could you be a financial advisor without such.

[steves]

I'm at 32% but don't it anyway. I want to avoid IRMAs and SSA being taxed. I plan on converting 300k this year and the next 2 years

[BobHildenbrand]

I'm 76, 600K in ira. Currently in the 35% bracket + 3.8% + 6.85 NY state tax. Should I convert over the next 2-3 years?

[auricgoldfinger]

67 now, and will not do a Roth conversion. Paying taxes now based on bracket estimates in the future is foolhardy. What if congress increases the RMD age to 75? How bout 80? Not unlikely in view of trends. Qualified charitable distribution is another way to encourage philanthropy and lower tax issues.
Roth conversion is a bit of a racket created by the wealth management “gurus “ to fill their coffers