Reply to Roth Conversion later in life, near retirement

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Anyone try the services of Craig Wear —who bills himself and his team as having a niche expertise in Roth conversions (having it done it exclusively fir past 15 years) to lessen tax liabilities and use money on own teems versus forced RMDs etc. His fee of 10k (or 9900). Seems steep but he offers 100% guarantee of tax savings or money back.   [/quote]

That’s crazy. No way would I pay that. I would start by paying for pralana or maybe boldin or at least post your info on bogleheads and see what reactions you get.

tbh my rule of thumb is that Roth conversions are rarely worthwhile— the benefits are generally small and uncertain. [/quote]

The biggest benefit is to the heirs.. they get to have the money grow tax free for 10 years post-inheritance before withdrawing tax-free. [/quote]

But the pot of money growing is smaller due to taxes paid and it’s very possible they’d be better off paying taxes at their rates over 10 years than having the OP pay taxes in a year or two at OP’s rates. [/quote]

True. However, you can mitigate this in several ways:
- convert over multiple years vs in a couple
- pay taxes on those conversions (or at least partially) 
- living in a low/no-cost state
- structuring your conversions for tax optimization so you pay lower taxes overall relative to what working adults would.

We are in the 24% tax bracket now with another 5.75% for state. In retirement, we hope to be in a zero tax state and be in the 12% tax bracket. We also expect our kids to be in at least the 32% tax bracket by the time we kick the bucket, plus potentially high state taxes. The tax rate differential would be huge for them.

Realistically, most people should begin these conversions at a tax-convenient time and move as much as they can into a Roth. The money grows tax free and can be withdrawn anytime. For example, if I have a $30K tax bill on the conversion and I have $30K in a brokerage account (stock), I'd rather sell the stock, put that money towards the tax and convert the entire amount into a Roth, and rebuy that same stock inside the Roth. I can withdraw from the Roth for as long as I need to and what's left will go to my kids. [/quote]

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