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I am still confused regarding the payment of taxes on Roth conversions. One of the answers to the top 10 Roth IRA qestions indicated that "spreading out the income is NOT the same as spreading out the Tax on the converssion. What does this mean? Let's say I decide to spread out my conversion of $50,000 over four years. So, my AGI increases by $12,500 each year. In years 1998 and 1999, assume I am in the 28% bracket so I pay 28% on the $12,500 each year. But in 2000 and 2001, I am in the 31% bracket so I pay 31% on the $12,500 in each of those years. Is this correct?
I guess what I am asking is does the statement from the top 10 Roth IRA questions mean that I don't pay 28% each year - since I converted when my tax rate was 28%? I pay my current tax rate on the $12,500 each year?
Sorry to have gone on so long. Thanks for your help.
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