@kbmblizz1940
One angle to be mindful, breakeven age is a number. Most ppl age rapidly before expiration. The best retirement years are the golden age when there is health & $ to enjoy. Paying the lowest taxes in life will never be my goal.
@77magicbus
Excellent video. You have a good channel. This is my last year of doing large Roth Conversions. This year I am in the 37% bracket, but I think it is well worth it. The past 4/5 years I have been in lower brackets. I think these Traditional IRA accounts are just tax LIABILITIES, and that anytime the government wants to they can RAISE TAX RATES and then you are trapped. I chose to get it over with in a 4 to 5 year period. If you don't you never get out of the deferred bucket as interest or capital gains keep adding up. Next year I am home free, and don't have the tax monkey on my back.🥳
@eikoGoldstein
With only 1 million in tax-deferred assets, the RMD is about 40K/year. Even with 2 million in assets, the RMD is 80K. When you subtract the std deduction, you are still in a very low tax bracket. Don't go overboard in the desire to avoid taxes! The taxes in retirement come at you one year at a time. Converting forces you to pay extra taxes immediately. It may take many years to recoup this money.
@reesesha2289
Thank you for all the great content. It's so much easier, in many ways to work, bring home a paycheck, healthcare, let my 401k grow, ect. Wow, retirment is so overwhelming and complicated!
@johnscott2746
My Roth conversion paid off immediately. My wife and I had to keep our reportable income at a certain level in order to qualify for subsidies on our health insurance. When we had an emergency come up we used the Roth conversion to pay for it and kept it from disqualifying us from the subsidies.
@keithwalters318
Another great video. I agree that there’s more than break even. Among other things as you’ve stated, there’s the widows penalty and also we have two children that we’d like to leave tax free dollars to-our gift to them. We pay the taxes so they don’t have to. And of course, we would pay taxes at a lower rate than they would.
@JFreeUNC
Regardless of breakeven, I’m doing conversions for my kids, one of whom is already in the 32% tax bracket.
@petehoeft6518
ok. First, thanks for doing this video because our advisor is suggesting the Roth conversions and only gave the executive summary. I'm a numbers guy and want to know the details, but also whether this is just a numbers game. And your starting question is close to what I'm wondering. Frankly, is it worth it? And like someone mentioned earlier, we're in our go-go years and all the conversions would be at 22% and taxes paid for out of the retirement fund, so we're now depleting our investments (via living and taxes) at a faster rate and we don't know how long we will live. I can't see the upside. Basically, my wife and I were shown a 25-year window by the advisor (just an executive summary with no details). I'll be 87 at that point. It's like the idea of waiting for social security. You can't predict how long you'll live, so it's best to live now. It's not just a money game where we're trying to max out how much money we can make, it's a life conversation. I'd recommend a slight change to the video. Don't hop around. You're familiar with the topic and we're having to process it as you go. So just walk a simple example all the way to the end and then answer the base questions; e.g., how does this help us in our day-to-day/month-to-month budget? How does this result in more money in our accounts that we live off of and how likely is that? I'd even want to see a graph of the break-even point. Basically, I'm just concerned about funding our retirement and not too concerned whether there's an inheritance. And if there is, since my heirs did not work for the money, anything they get they should be thankful for since the funds were meant to fund the retirement and the tax hit is what it is. Having said that, I do want to make sure my wife is taken care of.
@bmiles1232
another unknown is the possibility of years of assisted living expenses. If you end up with years of assisted living expenses, these expenses can be deducted and cover the taxes you would pay on your RMD's. Much better to pay these assisted living expenses from your IRA than from your Roth.
@Bondbeer
Good video. It highlights an important issues related to Roth conversions, which is focusing on the tax savings will make Roth a better choice in many more scenarios than focusing on the correct item which is after tax wealth. It takes much longer for a Roth to pay off when looking at after tax net worth. In fact, you can defer and pay twice as much tax and still come out ahead if those tax dollars are paid by you or your heirs at lower rates (%) than you would pay on the conversion
@paulschaaf8880
The main reason I'm thinking I'll probably do a conversion is to avoid the RMDs. I don't want to be forced to take out more than I need. I want to control what I withdraw.
@PorscheSpeedster-kz6nc
I love the ending statement in that “This is how we got into this situation in the first place!”
@thereasoner9454
My perspective is to focus mostly on spendable dollars versus taxes paid. If I end up with more spendable dollars, and I pay 3x more taxes, who cares. I need more money for my wife and I period. No money is your money until you pay taxes. However actual dollars matter more because no one takes equity for groceries. This doesn't apply to everyone, just us. Also, should either or both of them die prior to RMDs, those tax savings disappear quickly due to the widow's tax trap. I am a firm believer that you pay taxes when you have to. Also, I am sure I missed this, but if he is converting all this money, how does he stay in the 12% tax bracket when he is working for $120k/year. If he stops working, and converts, then he has zero income during the conversion years because it all goes to ROTH. Please show me where I missed this, thanks.
@sideler7057
Excellent videos overall! I appreciate the one video where you included a single person as an example. Far too many retirement advisors focus on married couples only. Also, please include some state taxation on retirement accounts in at least some of your calculations. I know states are different but many states do tax capital gains so how does that affect retirement financials? You can choose say 4 or 5% state taxation on capital gains as an example. Does it fundamentally change anything?
@owenhill-vf7ko
Everyone forgets those taxes during conversion. Taxes on 1 million dollars is about $200k ( even spread out over years). That $200k invested for 20 years becomes over $900k Dollars! Just a 1 % financial advisor fee on 1 million dollars for 20 years is over $530k dollars. We have done the math and are not converting our 401ks!
@vwarbase277
What's the best spreadsheet or calculator for visualizing what marginal tax bracket the conversion puts me in? I retired at 39. I want to convert my IRA slowly to only fill up the lowest income tax buckets.
@JeffWoodroof-by2ws
Thank you for the access to Right Capital!! Very helpful!!
@jasonkatada1583
So pay all those taxes in your go go years to have more money in your no go years? 🤔
@mikeostate
I haven't seen anywhere in Kevin's videos or in the Right Capital (Foundry Financial?) calculator in which the time value of money is taken into consideration. A dollar of tax savings 15 years from now would not be worth the same as a dollar of tax outflow now. Maybe the calculator does allow for a discounting, but it is not readily apparent that it does.
@Jantorvin