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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: Re: IRA to Roth IRA Conversion Date: 7/29/2013 2:27 PM
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As pointed out, there's not enough information.

I would say that there's enough information to have a discussion of the concept of converting from a Traditional to a Roth a little at a time, which seemed to be what the OP was looking for.

The investment income could be cashing in on the investments in a taxed account.

Then I guess you and I have different definitions of 'investment income'. To me, 'investment income' is income that is derived from investments, without selling the underlying investment. If one needs to sell the underlying investment, then one is digging into capital, which I don't count as 'investment income', but rather, 'realizing capital gains/losses'.

The goal shouldn't be to minimize taxes paid each year but rather get the money out of a traditional IRA at the lowest tax rate. This could be done through conversions or withdrawals.

What was said about taxes was Since the OP already is generating enough income to live on, and pay taxes from, there is no need to substitute IRA withdrawals for investment/rental income. The OP's idea of converting from traditional to Roth IRAs is more likely to result in lower tax bills than starting early IRA withdrawals that are not needed for income.

Not sure how that was interpreted as 'minimizing taxes paid each year', since either a withdrawal or a conversion from a Traditional IRA would result in the same amount of taxes being paid (assuming that the same amount is withdrawn/conversted). However, what happens to the amount withdrawn or converted does have an impact on future taxes. Since the OP already stated they didn't need to tap the IRA for need additional income, presumably, a withdrawal would get re-invested, hopefully generating future tax bills, due to capital gains and/or taxable investment income. In comparison, converting to a Roth would shield any capital gains or investment income from future taxes.

AJ
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