Personal Investments • Roth conversion and sequence of return risk

I still don't see a sequence of return risk associated with the conversion.

Not specifically regarding OP's case, but generally speaking:

The sequence of return risk (SORR) comes from the fact that, if you withdraw a fixed dollar amount from the portfolio, then a poor sequence of returns (poor returns early followed by good returns) will reduce the ending portfolio balance compared to a good sequence of returns (good returns early followed by poor returns).

So the poor sequence of returns can put you into a lower tax bracket in late retirement.

If you convert to Roth now, you'd be paying at the current tax bracket, which may be higher than the low tax bracket you would have gotten with a poor sequence of returns.

Statistics: Posted by Ben Mathew — Wed Dec 13, 2023 11:34 pm — Replies 17 — Views 1039

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