Agree with David Jay.We have about $15k available from the sale of company stock and are trying to decide whether to do Roth conversions and use these funds for taxes or just invest them directly into our taxable brokerage.
We're about 6-7 years from retirement. Our investments are about 45/45/10 between pre-tax (401k and traditional IRA), a taxable brokerage and relatively small Roth balance. We also have an emergency fund in cash equivalents.
Due to changes that are suppressing my compensation this year, we have room in the 24% tax bracket to convert a portion of the traditional IRA funds to Roth and use the $15k to pay taxes. We don't anticipate having this room in the 24% bracket in future years. Our alternative is to invest the $15k in the taxable brokerage account.
Based on expenses and current tax rates, it is likely that our marginal tax rate would be 22% in retirement. However, there is significant uncertainty in future tax rates as soon as 2026 when the TCJA is scheduled to expire. In addition, having more tax-free funds in retirement would have flexibility benefits, particularly since we plan to use the Affordable Care Act to bridge between employer insurance and Medicare.
What would you do and why?
Statistics: Posted by BitTooAggressive — Tue Sep 17, 2024 2:37 am