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re: Using a Roth 401K to minimize RMDs - Good idea?
Posted on 4/4/24 at 11:38 am to Tygermanjohn
Posted on 4/4/24 at 11:38 am to Tygermanjohn
quote:
We are in our early 40s and our guy is advising the same thing. When he first mentioned it, I thought he was crazy, but the model has us thinking it’s the right thing to start doing. I was a difference of about 3 million in taxes paid over the model to age 90.
I switched this year to Roth 401k conversions from traditional, and will start converting our traditional 401k over the next decade or so at the top of each bracket.
I appreciate you weighing in on this. This seems to be a paradigm shift in the way to consider retirement savings.
quote:
Tax free (with no 10 year RMD) for heirs
IIRC, the spouse is the only one that doesn't have a 10 year RMD window. I'm fairly sure that heirs would still have the 10 year window.
quote:
Lower bracket for Medicare and health insurance
Good point there.
Thanks again
2
Posted on 4/4/24 at 11:56 am to FortunateSon
What bracket are you projecting in retirement? I have a hard time believing An extra $61k into traditional 401ks each year for 10 years is going to make that much difference for RMDs especially if you have ~10 years to draw them down/convert to Roth before RMDs kick in. 37% differed tax rate would be tough to pass up.
If you're facing top marginal rate today anyway couldnt you just take a huge withdrawal in one year just before Medicare eligibility (I think IRMAA is a 2 year look back at MAGI so might need to pull it a couple years sooner.) That way you dont lock in top marginal rate in case drawdown strategy can reduce tax rate. Of course there is risk the top marginal rate is higher by then.
You're in the top bracket, really? $647,851+ after deductions?
If you're facing top marginal rate today anyway couldnt you just take a huge withdrawal in one year just before Medicare eligibility (I think IRMAA is a 2 year look back at MAGI so might need to pull it a couple years sooner.) That way you dont lock in top marginal rate in case drawdown strategy can reduce tax rate. Of course there is risk the top marginal rate is higher by then.
You're in the top bracket, really? $647,851+ after deductions?
This post was edited on 4/4/24 at 12:10 pm
Posted on 4/4/24 at 1:40 pm to FortunateSon
Correct, heirs would have the 10 year draw down but would not be a taxable “event” as far as I understand it.
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