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Hare wrote,

<<I am assuming that if I make 0 dollars in 1998, move 100k to a Roth from a traditional, that I will pay 15 percent tax in each of the 4 years, even though year two, threee and or four I may have income that puts me in a 28 percent bracket. What I am getting at is the 15 percent tax rate frozen for 4 years?>>

TMFPixy wrote
<<If you have 0 AGI in 1998 and you use the 4-year spread on the conversion income, you'll be in the 15% bracket in 1998. In 1999, 2000, and 2001 your other
income will be added to the \$25K you must declare in those years. The rates will be those in effect in those years based on your total taxable income in those years. Thus, if you have \$200K in other taxable ncome in 1999, the \$25K conversion money makes that \$225K, and your marginal bracket will reflect that fact by being well beyond the 15% range.>>

*IF* the technical corrections are passed as they are currently being considered (that is, to give individuals the option to pay all the taxes at once rather than over four years), you might want to consider the possibility of declaring the whole rollover as taxable income for 1998. I haven't done the math yet for myself (it can wait until next February or so, since I've already converted my IRA's and I won't need to make estimated tax payments), but here's a rough guess:

For example, let's assume 100,000 of AGI leads to 90,000 of taxable income.
If we pay taxes on 100% of the rollover in 1998: At 15% up to \$40K and 28% above that, the federal taxes would be 0.15*40K + 0.28*50K = \$20,000.

If we pay taxes on 25% per year for 1998-2001: In the scenario outlined in the original message, there was no other income in 1998, so the AGI would be 25,000, and taxable income = \$15K, leading to tax of \$2,250.
In each successive year, marginal tax rate of 28% leads to taxes on rollover of 0.28*25K=\$7,000.
Thus the total tax bill over four years is \$23,250.

Of course there is a benefit to paying the taxes later. A quick IRR calculation suggests that, in this case (ignoring estimated tax payments and all else being equal), it is advantageous to defer payment of the taxes if your money can yield 8.9% or more.

Obviously, the example and assumptions are not exact, but hopefully they're a starting point for some thought on the subject.

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