On Jul 22, 8:58 pm, Rich Carreiro <rlc-n...[at]rlcarr.com> wrote:
- quote -

Good article. Another reason to convert might be to avoid the possible
increase in state income taxes when moving to another state.

--
Ron

Mark Bole wrote:
- quote -

I found it worthwhile as well. It covered some issues that never occured
to me such as Net Oprating Loss (NOL) which would effectively give
someone negative income and a chance to convert money at no cost at all.

It also made no mention of the odd phantom rate anomolies due to social
security income. I've been polishing an article discussing this, and
plan to put it on my site over the weekend. The punchline, as it
pertains to the Roth conversion is this: A single person with $15,000 in
SS benefits will experience a phantom marginal rate of 46.25% as their
other income (I was thinking IRA withdrawals) exceeds $32K. A bit of
tinkering, converting to Roth in pre-SS years, and/or postponing Social
Security benefits, would help that person manage their tax burden.

A more thorough discussion on the topic (and my intent for an expanded
Roth article) would have other examples of disruptions in one's life
which impacts their marginal rate. Someone who goes back to school and
therefore has a drop in income, maybe to zero as she lives off savings
or with a relative, this may be a chance to convert at 0 to 15% bracket
at litle cost. Similarly, a couple where one party chooses to stay home
with a new child for a few years before returning to work can use those
years to convert while in that lower bracket. There are likely many
circumstances, some more common than others, that can favor conversion.

JOE
http://www.joetaxpayer.com/ss.html (A preview of my feature article next
month)

Rich Carreiro wrote:

- quote -

I found it worth the time to read through (although I did not delve into
the examples in detail).

Two comments:

1) the discussion of how to avoid anti-cherry-picking rules when
recharacterizing conversions was interesting, but it also seems like a
way to generate a lot of extra fees for financial planners and tax
accountants in anticipation of tax savings that may or may not ever
happen, or that may not be maximized (because you missed the optimum
time to recharacterize while waiting for the time limit clock to run out).

2) nowhere did it mention what I still consider one of the more valuable
benefits of conversion: starting the five-year clock on avoiding early
distribution penalties.

-Mark Bole

See:
http://tax.cchgroup.com/images/fot/J...bler-Bigge.pdf

--
Rich Carreiro rlc-news[at]rlcarr.com