4 Reasons To Do ROTH Conversions If You Have A Pension

Рет қаралды 14,771

Ай бұрын

Here are 4 reasons to ROTH Convert if you have a pension
Dave Zoller, CFP®
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Пікірлер: 22

@PB4Y2 Ай бұрын

Not to get too picky but a QCD is a Qualified Charitable Distribution (not Deduction) because it is not deductible (but also not taxable).

@flygirl5633 Ай бұрын

I started drawing a military pension at age 55. At that time I was about 30% ROTH, 70% traditional 401K/IRA. Have been doing conversion whenever I have enough to pay taxes hoping to result in 50% to 60% ROTH by age 63. This is to not only avoid huge tax liability by age 75 but to keep taxable income low enough as not to trigger higher brackets of IRMAA.

@billh4285 Ай бұрын

This is exactly where I'm at. I have a pension and retired last year at 62. I did my first conversion and will continue each year until it's all converted, staying in the 24% bracket. As you said, my IRMAA costs are going to be painful for the first few years. I have used New Retirement for 2 years and it is well worth the $120 a year to use. I heard that the Republicans in Congress have already started planning on trying to extend the Trump tax cuts. If he wins in 2024, we could catch a break and continue to enjoy lower rates for the conversion taxes.

@stevemlejnek7073 Ай бұрын

I will have a deferred income annuity (similar to a pension). It will start in 6 years along with social security. I am and will keep doing Roth conversions, but balancing many things in determining how much to convert each year. Keeping 12% tax bracket, ACA subsidies, IRRMA in mind prior to Medicare.

@joedessenberger2048 Ай бұрын

Great video! I have been considering ROTH conversions simply for the tax bomb after RMDs. We will likely never use the 401K money and would like to lower the tax liability for both ourselves and our heirs.

@donaldcardinal8712 Ай бұрын

While the RMD is currently 73, doesn't it increase to 75 in 2033?

@keithmachado-pp6fv Ай бұрын

Good video. The ideas apply equally whether you have a pension or not. The only difference is the starting point of forced income.

@justintx75 Ай бұрын

thanks for doing videos on retirement with pensions............

@schermnaam5811 Ай бұрын

Thanks for covering an often neglected topic as most folks don’t have pensions. As those married filing jointly have proportionally far more “room” for 0-24% bracket conversions than single filers, pension or not, Roth conversions typically make sense, as you note even more so for married pension recipients. Conversely, the trade off (of paying taxes now vs later) may not be as beneficial for single filers. You reference the NR Roth Conversion Explorer, which asks for a conversion priority (e.g., highest estate value, lowest tax burden, highest bracket to be filled, IRMAA bracket limit) for the modeling. For all strategies, the most common result is for the final estate value to be lower than without conversion, the tax savings usually higher, again far more so for those MFJ. I appreciate your diligence in explaining the many “it depends” scenarios that others ignore in favor of giving one size fits all advice. I would be interested in your additional insights regarding 1) the different situation of the SF vs MFJ Roth decision and 2) making a distinction between tax avoidance and maximizing discretionary spending (the former potentially reducing the latter due to the potential impact of paying conversion taxes on the compounding returns of deferred assets).

@ld5714 Ай бұрын

Excellent discussion Dave and it is spot on IMO. I have been retired for 13 years and been doing Roth conversions for the past 4 years. While I"ve made good progress, I regret not starting the conversions years earlier. Contrary to the old saying, ignorance isn't always bliss. Larry, Central Valley, Ca.

@stevekrewson4931 Ай бұрын

Thanks for a simple explanation My wife and I will both be drawing pensions and have managed to squirrel away a good amount in 401(k). I’m sure at age 73 or tax bracket will change significantly if we don’t move forward soon with conversions. Thanks again for your help.

@erickarnell Ай бұрын

Roth conversions could make sense for us especially while drawing a pension but before taking SS.

@donnahart6338 Ай бұрын

Very helpful. Thank you very much!

@sarahbower587 Ай бұрын

Thanks for a video focused on pensions. There isn’t enough info about that.

@user-qg9fc4uh2q 26 күн бұрын

I would like to watch a video on doing a Roth conversion during a sabbatical (no income) year?

@liveandretireusa Ай бұрын

I can do those 4 reasons

@DJohnson-od6oj Ай бұрын

Thanks for the great video. I wish I would have found this 3 years ago when I retired with my military retirement. I am doing a Roth conversion this year but I should have been doing them for several years.

@stevezoleski8844 Ай бұрын

Great video Dave! Can you split the QCD amount between yourself and a charity and only pay tax on the amount you receive? Thanks for breaking it all down.

@Nicolewhit Ай бұрын

I know nothing about trading /investment and l'm keen on getting started. What are some strategies to get started with?

@owggarage723 Ай бұрын

If my pension is in the form of a company purchased annuity, can it be converted?

@BSinNH Ай бұрын

Bummer that you guys aren’t locked in in NH.

@BSinNH Ай бұрын

Pension, tradional ira, Roth IRA and Roth 401k with company match going into pre-tax. Just moved $80k from traditional IRA to Roth. Why $80? Keeps me in the same tax bracket. Goal is to move all of the traditional ira to ROTH. Will take awhile as I have a little over a mil in the traditional. I am thinking of IRMAA and tax on SS. Also, easier for my heirs as there will be no tax issues for them.