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It depends on whether the 2025 Congress allows the Fed tax rules to revert to what they were prior to 2018 or the TCJA is modified to keep certain of the changes.

I assume you're retired and referring to $$ remaining in your former employer retirement plan and/or your Traditional IRA (TIRA).

If so and you think bracket rates will revert from 12% to 15%, 22% to 25%/28% (most retirees reading this will not be in the 32%/35% and 37%/39.6% I'd imagine), then you may want to do a Roth conversion to the top of your current bracket.

To get an idea how to calculate this, assuming you were retired for all of 2020 and you expect 2021 income and deductions to be about the same, look at your 2020 1040SR line 15. Next subtract from this number the amounts shown in lines 3a and 7 (assuming 7 is a positive number). This calculated number is your taxable ordinary income. If this value is less than $40,400 (single) or $80,800 (married filing jointly, MFJ), then you are in the 12% bracket and if you convert an amount equal to the difference between them, it will be taxed at 12%. But if you have amounts in line 3a and/or line 7, it gets a bit more complicated.

Example: A couple are MFJ and their 2020 1040SR line 15 = $60,000 and lines 3a + 7 = $10,000, this gives the couple $80,800 - $50,000 ($60,000 - $10,000) = $30,800 of 'headroom' in the 12% bracket. So if they convert $30,800 of their TIRA (one or both of them) to a Roth, that $30,800 will be taxed at 12%. However, with the adding of $30,800 of ordinary income in this example, the sum of lines 3a + 7 will be 'lifted' up above the top of the 12% bracket and will be taxed at 15% from their former tax rate of 0%. Thus their tax on this Roth conversion will actually be 12% X $30,800 PLUS 15% X 10,000 = $5,196 or $5,196/$30,800 = 16.9% instead of a flat 12%, for Federal tax (any state tax will be in addition to this). So for those with 'headroom' in their 12% bracket will get a more favorable tax treatment for a Roth conversion if they have little or no amounts in lines 3a or 7.

'Headroom' in the 22% bracket would be calculated the same way, except that the sum of lines 3a + 7 will continue to be taxed at the 15% rate so the calculation is a bit easier as only the Roth conversion amount is taxed at 22%.

Here are the tops of the ordinary taxable income tax brackets for 2021 for reference

MFJ Tax Bracket Rates
10% $19,900
12% $81,050
22% $172,750
24% $329,850
32% $418,850
35% $628,300
37% $638,300

Single Tax Bracket Rates
10% $9,950
12% $40,525
22% $86,375
24% $164,925
32% $209,425
35% $523,600
37% $523,600


FYI

BruceM
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