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<blockquote data-quote="Ms.PacMan" data-source="post: 1075711" data-attributes="member: 4656">Re: Health Benefit ShockMany people do Roth conversions in retirement. In Upstate&#039;s case (based on the few posts I&#039;ve read where he&#039;s spelled out his finances) he will lose half his pension to his ex-wife so he will probably be in a lower income tax bracket. Assuming he can afford to live on this amount of reduced pension, he can withdraw enough money from his trad. 401K, up to (or possibly thru to the next tax bracket), and place that money in a Roth IRA, each year until he is 70 1/2 (or until such time that it doesn&#039;t make financial sense). He benefits also because he is lowering his adjusted gross income (AGI)/ taxable income, by contibuting the max to his 401K now.Yes, there is tax on a conversion. A person will never get out of paying taxes. But at what rate is the question every individual needs to figure out for themselves. There is also a risk or zigging when you should have zagged but........If you have wiggle room between retirement and RMD&#039;s and have money in a tIRA or t401k then read up on conversions. <a href="http://fairmark.com/rothira/index.htm#conversions" target="_blank">Guide to Roth IRA, 401k and 403b Retirement Accounts</a>If you&#039;re a young person reading this, move along - Roth all the way!</blockquote>

[QUOTE="Ms.PacMan, post: 1075711, member: 4656"] [b]Re: Health Benefit Shock[/b] Many people do Roth conversions in retirement. In Upstate's case (based on the few posts I've read where he's spelled out his finances) he will lose half his pension to his ex-wife so he will probably be in a lower income tax bracket. Assuming he can afford to live on this amount of reduced pension, he can withdraw enough money from his trad. 401K, up to (or possibly thru to the next tax bracket), and place that money in a Roth IRA, each year until he is 70 1/2 (or until such time that it doesn't make financial sense). He benefits also because he is lowering his adjusted gross income (AGI)/ taxable income, by contibuting the max to his 401K now. Yes, there is tax on a conversion. A person will never get out of paying taxes. But at what rate is the question every individual needs to figure out for themselves. There is also a risk or zigging when you should have zagged but........ If you have wiggle room between retirement and RMD's and have money in a tIRA or t401k then read up on conversions. [URL="http://fairmark.com/rothira/index.htm#conversions"]Guide to Roth IRA, 401k and 403b Retirement Accounts[/URL] If you're a young person reading this, move along - Roth all the way! [/QUOTE]

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