I’ve been dutifully converting according to my pre-disclosed schedule and have just shy of 500K converted. My goal was to convert 1M by age 70 (3 years from now) and an unchanged schedule would result in 600K of Roth by the end of 2019. I already have the taxes paid on my present conversion from last year carryover and some additional money sent to the treasury.
It turns out a bill is wending its way through congress raising the RMD age to 72 from 70. This gives me the option to convert at the same schedule for 2 more years at a higher net conversion (probably around 1.2M net). OR I can convert to the same 1M by age 72, paying less taxes along the way. The tax savings on the slower conversion is not trivial about 97K over 5 years or 20K/yr not huge but not chump change either. The 5 years will be covered under the current tax law, so there will be no danger of reversion to 2018 law before it’s all said and done.
None of my arguments regarding how much to convert changes. At 72 I still want 1M in Roth and abut 600K in Pretax which I will RMD at 72. The Pretax will contain my bonds offering slow growth and steady returns, keeping me in a lower tax bracket longer. We will still do the SS doe see doe, where my wife will claim SS at 62 and I will claim spousal until I become 70 when I will claim my maxed out SS, she will continue with her SS. Upon my death she will acquire my survivor benefit maximizing our SS payout over our life times. All of it works the same except by extending the period of conversion I manipulate myself into a lower tax bracket for the next 5 years of conversion, which is how the extra 100K is generated. That’s money I will no longer pay in conversion taxes and will stay in the bank. This tweaking around the edges, but tweaking none the less should result in a free extra year of retirement thanks to this change in the tax code. I will still use small aliquots of post tax money to round out my yearly spending with a net cap gain of zero.
Thought I’d let everybody know what’s coming down the pike. Full (no side gig) retirement with the ability control these situations is the best thing that ever happened to me. It didn’t happen out of the blue or according to a MMM formula. The plan took a couple years create, understand and optimize all the moving parts, and to bring to fruition. If I was still “making money” as in some kind of W2 like income none of this would work.