This is why I would see little value in over analyzing the decision as if we had precise information on what tax rates and returns will be for the next 30 or 50 years. The possibility of long term care is just one more unknown, but is also part of the unknown future tax rates. In addition to a change in actual rates, there could be a change to the deductiblity.I find the discussion frustrating. People make plausible generalizations about Roth conversions without actually looking at any numbers to substantiate the assertion. I am not seeing any facts or trades to back up assertions about overdoing Roth conversions. Sometimes Roth conversions can be overdone (which will only be known in hindsight). Sometimes we should have done more Roth conversions (which again, will only be known in hindsight)...That makes sense to me, since it's all about the effective marginal tax rates. If some of the money spent on long term care is taxed at 0%, then converting at any tax rate above that was most likely not helpful.But if one does end up paying from Roth then it implies Roth was overdone. That is all I have been unsuccessfully trying to point out.
But even without that possibility, I think it would be pretty rare circumstances where converting 100% would make financial sense?
For myself, converting all we can at 12% is where I feel the odds are strongly in favor of conversions. That will leave us with about an equal amount in Roth and TIRA. So leaving a significant balance in traditional will happen, regardless of any additional analysis related to LTC.
Statistics: Posted by jeffyscott — Tue Jul 23, 2024 1:09 pm — Replies 120 — Views 13972