Yes, and a high percentage of dividends from a broad market index fund will be qualified, so I'm not seeing that as a problem. It does add to total income but not significantly for someone doing hundreds of thousands of dollars in conversions.I'm in that boat, though 15% CG tax + 3.8% that I use to pay for conversions and other expenses, but I don't see qualified dividends as an issue because they go into "taxable income", not the ordinary income that IRA withdrawals/conversions go into. I need the dividends to help pay the bills.It's true that if you're paying conversion taxes by realizing capital gains, that's an issue, especially at 20% (plus 3.8% NIIT of course), which may happen with mid-six-figure annual conversions. If you have enough time you can try to manage that with alternating larger and smaller conversions from one year to the next, but the real problem (such as "problems" are for people converting that much) is getting yourself into that situation in the first place.
But I'm picturing the post as referring to ditching 1.5% (mostly qualified) dividend equity index funds in exchange for Berkshire (or similar, although that's a pretty limited universe), and that's a sticking-a-finger-in-the-dam scenario.
Personally, I see non qualified dividends as the larger foe since that income gets taxed at my 24% marginal rate +3.8%.
Statistics: Posted by tibbitts — Thu Feb 01, 2024 10:41 am — Replies 18 — Views 1405