Comments on: Roth IRA Conversion Calculators http://gotoretirement.com/2009/11/roth-ira-conversion-calculators/?utm_source=rss&utm_medium=rss&utm_campaign=roth-ira-conversion-calculators A Baby Boomer's Journey from Retirement Planning to Retirement Living Wed, 28 Jul 2010 18:04:36 +0000 http://wordpress.org/?v=2.9 hourly 1 By: Randy http://gotoretirement.com/2009/11/roth-ira-conversion-calculators/comment-page-1/#comment-1883 Randy Mon, 16 Nov 2009 05:51:45 +0000 http://gotoretirement.com/?p=4263#comment-1883 Consider converting assets that should have large increases in future value. Using a self-directed IRA (non-Roth), I purchased a subdivision lot 2 years ago that is now worth $110,000 less than what I paid. My response was to purchase a second lot this year at the lower price, also using the self-directed IRA. Next year I will convert to Roth and pay taxes on the lower amounts. Living in Utah with limited private land near the population areas and with a population doubling time of 30 years, I expect these currently devalued lots to increase in value much more quickly than the stock market. Consider converting assets that should have large increases in future value. Using a self-directed IRA (non-Roth), I purchased a subdivision lot 2 years ago that is now worth $110,000 less than what I paid. My response was to purchase a second lot this year at the lower price, also using the self-directed IRA. Next year I will convert to Roth and pay taxes on the lower amounts. Living in Utah with limited private land near the population areas and with a population doubling time of 30 years, I expect these currently devalued lots to increase in value much more quickly than the stock market.

]]> By: Brian http://gotoretirement.com/2009/11/roth-ira-conversion-calculators/comment-page-1/#comment-1856 Brian Tue, 10 Nov 2009 22:52:05 +0000 http://gotoretirement.com/?p=4263#comment-1856 The problem that I have with most of these calculators is that they: 1. do not take into account State taxes 2. do not take into account the higher tax rate they it will put you in for this year, and then pay higher tax on all your other income. 3. it seems to be that if you have $100k or so to convert, and having to pay 35K+ in taxes now, you will likely have to sell other assets to come up with the taxes, which again creates more taxes. That's too big a hole to make up in my opinion. Especially if you already have a mix of both Roth and non Roth for your retirement. If we were talking less than 20K to convert, and I wasn't in a 9% income tax state, I would be PRO convert. Would love to hear others opinions. This is just mine. Brian The problem that I have with most of these calculators is that they:

1. do not take into account State taxes
2. do not take into account the higher tax rate they it will put you in for this year, and then pay higher tax on all your other income.
3. it seems to be that if you have $100k or so to convert, and having to pay 35K+ in taxes now, you will likely have to sell other assets to come up with the taxes, which again creates more taxes.

That’s too big a hole to make up in my opinion. Especially if you already have a mix of both Roth and non Roth for your retirement.

If we were talking less than 20K to convert, and I wasn’t in a 9% income tax state, I would be PRO convert.

Would love to hear others opinions. This is just mine.

Brian

]]> By: Britt http://gotoretirement.com/2009/11/roth-ira-conversion-calculators/comment-page-1/#comment-1851 Britt Mon, 09 Nov 2009 20:36:07 +0000 http://gotoretirement.com/?p=4263#comment-1851 Of course, if you've never made any Traditional IRA contributions, and you earn more than the Roth IRA contribution limit, it's a great idea to make non-deductible IRA contributions and quickly convert. In such a case, you won't need a calculator because no tax liability in retirement is better than the taxable withdrawals of a Traditional IRA. Of course, if you’ve never made any Traditional IRA contributions, and you earn more than the Roth IRA contribution limit, it’s a great idea to make non-deductible IRA contributions and quickly convert. In such a case, you won’t need a calculator because no tax liability in retirement is better than the taxable withdrawals of a Traditional IRA.

]]> By: BadDiver http://gotoretirement.com/2009/11/roth-ira-conversion-calculators/comment-page-1/#comment-1849 BadDiver Mon, 09 Nov 2009 18:21:23 +0000 http://gotoretirement.com/?p=4263#comment-1849 At age 55, I went through and used nearly all of these calculators, with mixed results. the RothRetirement.com calculator gave me a big YES ... convert now message. SmartMoneyMagazine.com made no sense to me. Dinkeytown calculator was the clearest of all the ones that I tried, especially when you click on the "view report" button at the bottom; it opens a new window very clearly detailing all of the assumptions and calculations. It also indicated that a Roth conversion would NOT be in my best interests at my age. At age 55, I went through and used nearly all of these calculators, with mixed results. the RothRetirement.com calculator gave me a big YES … convert now message. SmartMoneyMagazine.com made no sense to me. Dinkeytown calculator was the clearest of all the ones that I tried, especially when you click on the “view report” button at the bottom; it opens a new window very clearly detailing all of the assumptions and calculations. It also indicated that a Roth conversion would NOT be in my best interests at my age.

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