No. of Recommendations: 0
Mkraft asks:

<<Pixy, the final '98 Roth recharacterization deadline looms, and I am going over my decision one last time.

What in your opinion are the main factors for & against conversions of * large * IRA sums -- i.e., where marginal tax bracket will definitely be impacted due to the conversion?>>

The factors I consider important in deciding to convert or not are outlined in the analysis I did that appears in post 1567 at The most important considerations IMHO are to pay the taxes due with non-IRA money and have at least 10 or more years before you need to touch the money. Even then it's not a sure thing. I've seen few large-sum conversion scenarios that make sense because so much depends on tax rates today versus those prevailing in the withdrawal years. You must run the numbers similar to the procedure I used in the analysis.

<<In your mind, is there any situation in which having the conversion funds taxed at 28% for a person whose normal bracket is primarily 15% would still favor a conversion?>>

IMHO that depends more on the bracket in retirement more than the one you're in today. Ideally, you should be in at least
the same as the one in which you paid the conversion tax, and preferably a higher one. Otherwise you will encounter difficulty in overcoming the compounding lost on the intitial cash outlay for the taxes today. Again, you really have to run the numbers.

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