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Financial Planning / Tax Strategies
|Subject: Re: does it make sense to convert tradtional to||Date: 6/30/2009 12:11 AM|
|Author: Wradical||Number: 106410 of 122522|
My wife and I are both 69, with no kids. We have a about $450,000 in Traditional IRAs. Does it make sense to convert now, in 2010, or never?
In addition to the issues listed by TwoCybers, a lot depends on your whole tax picture - the amount and nature of your other income and deductions.
For 2009 you don't have a RMD yet, but you will for 2010 or 2011, depending on your exact birthday.
You don't indicate how much, if anything, you're already withdrawing.
If you're already making annual withdrawals, it's probably because you need the money.
In extreme situation where you converted the whole thing, you'd see 1/3 or more of principal go to taxes, depending on your state. And with that, a subsequent loss of 1/3 of income from the IRA in all future years. Not an appealing option to me.
It's not an asset you're leaving to your kids, so it's for you for your lifetime. Think of it that way. What you draw, you'll pay tax on, and kids aren't an issue. So why pay taxes before you have to?
I'd be inclined, in your situation, to leave it in the Trad. IRA.
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