Good discussion and explanations Eric. My conversions are primarily driven with the next generation in mind. Figuring out the tax implications, as you point out, can be very trickey. My heirs will be my two adult children and two grandchildren who are also now in their 20's. As I'm not planning on checking out anytime soon😉, guessing where everyone will be with their earnings and taxes when I die is like herding cats🤪. Have a great weekend Eric. Larry, Central Valley, Ca
My wife and I are aggressively converting to Roth during our pre social security retirement window. We have 2 married daughters in likely a high tax bracket. Our conversion goal is to maximize their Roth inheritance while leaving enough traditional IRA balances for my wife and I to live comfortably. If there is a remaining IRA balance, so be it, if we don’t have enough, we will start spending to Roth balances. In addition, to effectively pass on wealth to our grandkids, we are funding their 529 accounts. This allows our daughters to either fund their retirement savings more while we are living or enjoy a more comfortable lifestyle while not having to worry about future college expenses.
Wow. You explained this so well. You have a knack for showing the variables and offering possible solutions. Thanks for the weekly videos. I look forward to Friday evenings.
I fell unexpectedly into the widow trap in 2021. That (now filing single starting 2022) and Secure Act 10 year rule started my Roth conversion process. So I am trying to minimize the total tax bill of mine and my beneficiaries. I have two adult children one of whom is not married. I recently reduced the married child’s share and named my 2 month old granddaughter the amount I reduced her parent. For the next 20 years her income should be minuscule. Trying to cut the IRS out wherever possible.
Exactly. I’ve been going back and forth about whether to convert part of my IRA to a Roth now or wait. The idea of paying taxes now to avoid higher taxes later makes sense, but I don’t want to make a mistake.
Just completed my first large ROTH conversion. One more big one in 2025 in preparation for the possible reversion back to the pre 2017 tax brackets the year after. ROTH conversions for me are all about the widow tax and passing money on to my two children who will not only be high wage earners, but will be living in a time that taxes are almost certain to be higher with our government's spending habits. Great discussion!
Nice video. Note that the single high paid doctor might want to take a long unpaid sabbatical from her stressful job, and could use a withdrawal from the inherited IRA in the year she had no or reduced income from employment.
Can someone who is already retired, subject to RMD, and never had Roth IRA, still be allowed to do Roth conversions? I always thought that you must have the Roth account already available before retirement, since in retirement you don't have "income" to contribute.
@@rapfreak7797 Roth to high income earner, IRA to someone who likely will be in a lower tax bracket. A living trust is helpful in getting assets to my granddaughter since she’s in minor right now.
Good video. I plan on trying to spend down my IRA and my heirs will get everything else tax free. If I die before planned they pay more tax but on a larger balance because I fell short drawing it down.
Of course, some of us might be able to choose simplicity, even if it costs more. Like many areas of life, sometimes paying more is worth it for quality of life.
Good discussion and explanations Eric. My conversions are primarily driven with the next generation in mind. Figuring out the tax implications, as you point out, can be very trickey. My heirs will be my two adult children and two grandchildren who are also now in their 20's. As I'm not planning on checking out anytime soon😉, guessing where everyone will be with their earnings and taxes when I die is like herding cats🤪. Have a great weekend Eric. Larry, Central Valley, Ca
My wife and I are aggressively converting to Roth during our pre social security retirement window. We have 2 married daughters in likely a high tax bracket. Our conversion goal is to maximize their Roth inheritance while leaving enough traditional IRA balances for my wife and I to live comfortably. If there is a remaining IRA balance, so be it, if we don’t have enough, we will start spending to Roth balances. In addition, to effectively pass on wealth to our grandkids, we are funding their 529 accounts. This allows our daughters to either fund their retirement savings more while we are living or enjoy a more comfortable lifestyle while not having to worry about future college expenses.
Wow. You explained this so well. You have a knack for showing the variables and offering possible solutions. Thanks for the weekly videos. I look forward to Friday evenings.
Eric's graphs are miles ahead of his competition.
I fell unexpectedly into the widow trap in 2021. That (now filing single starting 2022) and Secure Act 10 year rule started my Roth conversion process. So I am trying to minimize the total tax bill of mine and my beneficiaries. I have two adult children one of whom is not married. I recently reduced the married child’s share and named my 2 month old granddaughter the amount I reduced her parent. For the next 20 years her income should be minuscule. Trying to cut the IRS out wherever possible.
Exactly. I’ve been going back and forth about whether to convert part of my IRA to a Roth now or wait. The idea of paying taxes now to avoid higher taxes later makes sense, but I don’t want to make a mistake.
Very good points about multiple heirs.
Just completed my first large ROTH conversion. One more big one in 2025 in preparation for the possible reversion back to the pre 2017 tax brackets the year after. ROTH conversions for me are all about the widow tax and passing money on to my two children who will not only be high wage earners, but will be living in a time that taxes are almost certain to be higher with our government's spending habits. Great discussion!
Same for me, I’m 20 years out from retirement though.
Nice video. Note that the single high paid doctor might want to take a long unpaid sabbatical from her stressful job, and could use a withdrawal from the inherited IRA in the year she had no or reduced income from employment.
Please do a video focusing on Roth conversion vs merely depositing an RMD into a taxable account.
Can someone who is already retired, subject to RMD, and never had Roth IRA, still be allowed to do Roth conversions? I always thought that you must have the Roth account already available before retirement, since in retirement you don't have "income" to contribute.
For me, Roth to my daughter, then skip a generation with the traditional ira going to my only granddaughter.
What is your goal/ justification with this method?
@@rapfreak7797 Roth to high income earner, IRA to someone who likely will be in a lower tax bracket.
A living trust is helpful in getting assets to my granddaughter since she’s in minor right now.
@@rapfreak7797 Presumably, the granddaughter will be in a lower tax bracket than the daughter.
Only potential concern I would see is the age of the granddaughter at the time of inheritance and how well she would use it.
Good video. I plan on trying to spend down my IRA and my heirs will get everything else tax free. If I die before planned they pay more tax but on a larger balance because I fell short drawing it down.
Of course, some of us might be able to choose simplicity, even if it costs more. Like many areas of life, sometimes paying more is worth it for quality of life.
Eric, your videos are exceptional! Thanks as always for making this complex topic digestible for the rest of us.
Pretty complicated in order to 'get it right' Eric ! Great info!!