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Author: coachtom4 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 25242  
Subject: Re: Old 401k, Old Question | Keep, Convert? Date: 2/27/2014 2:17 PM
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If you think you will be in a higher tax bracket in retirement, here is what I recommend, although I am a planner and kind of obsessive about paying taxes...

Move the money to a traditional IRA. In December of each year, figure out what your AGI is going to be and convert assets from your traditional IRA to a Roth IRA. The amount should be just enough to not get you into the next tax bracket.

For me, I am willing to pay 25% to uncle sam, but don't want to pay more. According to my own forecasts I will struggle to stay in this tax bracket when I reach 70 1/2 because of the required minimum distribution (RMD) rules. (I am in the 401(k)/retirement planning business and started saving right out of college...) So each year, I figure out what conversion I can do from tax deferred to Roth and not bump into the next bracket.

The other benefit of a Roth is having "tax flexibility" in retirement. If you need $100,000/year to live on you can take some of it from a tax deferred account, some from a Roth and some from your after tax account. You can legally manipulate which tax bracket you are in each year (except for the damn RMD rules...) This could be really nice so that perhaps in certain years you don't have to pay taxes on Social Security etc...

Just my 2 cents...
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