jfoxcpacfpModeratorStatus: Financial Advisor, Accountant, Small Business OwnerPosts: 7958Joined: 01/09/2016
At age 65, my typical recommendation is Roth conversions, as already referenced by @Faithful_Steward. Roth contributions are fine, too, but the impact at this point is relatively negligible. Hopefully, this person has an IRA and/or a 401k that s/he can begin converting to a Roth. At a minimum, s/he should fill out at least through the 12% bracket, maybe even through the 24% bracket, depending upon the ability to pay taxes and the tax brackets of the intended recipients.
If the recipients will be in the top marginal bracket, one technique is for the 65-y.o. to convert through the 24% bracket and for the eventual recipients to loan the $$ at a reasonable rate of interest to pay the taxes. A clause w/b added to the LWT to ensure the taxes are repaid from the estate at death.Click to expand…
JFox—is there an easy guide or something to figure a plan for this? I think I need to recommend this for my mom (71) who’s still working part time, they’re not taking any withdrawals aside from RMD and living on SS. I think she only has maybe 30k in Roth and several hundred in tIRAs. Think they’re in lowest tax bracket (living on ~75k/yr). So should they just move convert X amount each year, but not enough to bump a tax bracket?Click to expand…
In this case, I just don’t see the benefit if she plans to spend the Roth. If she plans to leave it to kids/grandkids, my answer would change. However, they would have to be able to afford the tax hit and also not convert so much that Medicare premiums jump.August 13, 2019 at 6:00 am MST #238517aelliscpacfaParticipantStatus: Financial Advisor, Accountant, Small Business OwnerPosts: 9Joined: 08/13/2019
I will add another thought that may or may not be relevant. Let’s assume you would like to employ a Roth Conversion strategy for your mother. She might want to get started sooner than later. The tax brackets will be more narrow if she has to file as a Single taxpayer at some point in the future. She will be able to convert more dollars into the Roth each year during her married years. This was relevant to me because my father passed in September 2018.
Andrew B. Ellis, CPA, CFA, CFPAugust 14, 2019 at 7:18 am MST #238819The White Coat InvestorKeymasterStatus: PhysicianPosts: 4482Joined: 05/13/2011
Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011August 16, 2019 at 2:03 pm MST #239361