1. I wish we had not made 'after tax' contributions to our IRAs. Doing so requires filing IRS form 8606 every year until the IRA no longer exists. Form 8606 is a real pain. When making IRA withdrawals or Roth conversions, the 'after tax' portion may not be taken first or last. It must be pro-rated each year.
  2. I heard Ed Slott speak on PBS, and later checked out his books from the library. I found his books to be an excellent resource on Roth Conversion. Read The Retirement Savings Time Bomb. Slott suggests that most financial planners are not competent in the area of Roth conversion. Not all 'experts' agree with Slott.
  3. Each case is different, but total taxes appear to be less if a Roth conversion is spread over a few years, rather than in one lump sum. A lump sum conversion is likely to push you into a higher tax bracket. Explore converting just enough to stay in the same tax bracket.
  4. It is tempting to convert in a way that minimizes taxes. It is wiser to convert in a way that maximizes assets after the conversion, net of taxes. The time-value of money is an important consideration.
  5. We found it beneficial to retain an amount in a traditional IRA or 401k. After age 70-1/2, Required Minimum Distributions are kind of like a federally mandated annuity. The extra income is handy, provided it doesn't increase taxes. For most retired couples on Social Security, the standard deduction and personal exemptions allow some taxable income without a tax increase. For us, it was about $11,000 per year, so we'll keep enough money in a traditional IRA to require an RMD of about $11,000.
  6. The interaction between Roth conversion amounts and timing, Social Security start date, income taxes, the time-value of money, future investment returns, and inflation rates make this a complex problem. We tried to solve the problem iteratively, working on each part until we were satisfied with the whole. Alternatively, a competent tax attorney may be able to help.
  7. Medicare recipients will pay an added monthly IRMMA fee for Part B and Part D if their Federal Adjusted Gross Income (AGI) for the second year previous, was over the current threshold. Even one dollar over the threshold will add $40 per month for Part B and $12 for Part D. In converting to Roth IRAs, be careful to avoid driving AGI over that threshold. In late 2015, it appears that Medicare recipients who are paying an IRMMA fee will be further penalized with a big monthly increase.

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