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URL:  http://boards.fool.com/so-the-way-i-figure-it-that-means-my-income-for-28972044.aspx

Subject:  Re: Rollover IRA - Conversion to Roth? Date:  12/20/2010  2:31 PM
Author:  ptheland Number:  111693 of 126608

So the way I figure it that means my income for tax purposes will increase 25K in years 2011 and 2012.
2010 taxes will not be affected Am I correct in this thinking?


You are correct.

I am staying at the 50K , 25K per year because if I do more it moves me into the next tax bracket.

Good reasoning, if you ask me.

Other factors that I do not think come into play but maybe I missed something.

All are immaterial to your proposed conversion from IRA to Roth.

But in terms of retirement planning, I often suggest keeping some retirement money in three places: tax-deferred accounts (traditional IRA or 401k), Roth accounts (Roth IRA or Roth 401k), and in taxable accounts. This gives you the most flexibility in retirement to choose from where to take your money so as to take best advantage of the future tax situation. It sort of hedges your bets. If we could predict perfectly what taxes would look like when you retire, you could just put all of your money in the one choice that would minimize your tax burden. But since we can't predict perfectly, the next best thing is to diversify your sources of retirement money so that you can pick and choose the best source for you when you need that money.

--Peter
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