Message Font: Serif | Sans-Serif
No. of Recommendations: 1
I would certainly convert enough to create a tax liability equal to the education credit you qualify for. That's found money in retirement. (For 2010, make sure you elect to have the entire amount included in 2010 income when you file your 2010 return.)

if OP's really fully on tax-free income, wouldn't it make sense to convert up to 0% bracket?

I'm not sure what you mean. There is no zero bracket nowadays (thankfully a concept that was short-lived, because it was so difficult to understand). To flesh out my original suggestion, it would be first to calculate the amount of Lifetime Learning Credit generated by the qualified education expenses, then convert that into taxable income. To that add the standard deduction amount and the personal exemption amount. The total is the amount to convert from traditional to Roth which would result in zero Federal tax.

State income tax is another issue, and this method would likely result in a state tax due. To make it totally tax free, work from the state numbers.

Rule Your Retirement Home Fool
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.