Should I make a $50,000 conversion from a traditional IRA to a Roth?

I am planning to make a partial conversion this year from a traditional IRA to a Roth IRA. I know conversions are generally not recommended for someone of my age (76), but I have looked at the IRS table for determining RMD's when I am in my 80's and the RMD's will go up sharply. I want to do a small conversation this year and if I like the result, continue with partial conversions in future years. When discussing conversions, I never hear anyone mention those RDM factors used for those in their 80's. What do you think of this idea?

Financial Planning, Retirement, IRAs
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September 2017
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Hello,

I like your spirit of continuing learning.  It’s not unusual, in terms of age, to do a Roth conversion if it benefits you taxwise. On the other hand, I’m not sure about what you meant your “RMD will go up sharply” as the factor for age 80 declines to 10.2 vs 12.7 at 76.  Unless you predict a superb market return in 6 years, your account balance decreases gradually each year as you make the withdraw via RMD requirement. Thus, mathematically speaking, your annual withdrawal could be smaller or fairly similar to the previous year.

Lastly, you must meet your annual RMD requirement first before the conversion.  In other words, if your 2017 RMD is $30k and you also want to make a $20k Roth conversion, you must take the $30k first to satisfy the RMD requirement, and then take an additional $20k for the Roth conversion.  You can’t substitute the $20k conversion as this year’s RMD requirement.  Therefore, the total amount of taxable income from the RMD and Roth conversion for 2017 is $50k.  If you have any other source of income, such as pension and/or annuity, you must consider if those income will push your income to pass the $170k (MFJ, $85k for Single) for Medicare related surcharges.  Consult a CFP® or RICP® to make sure your intention can be carried out properly.  Best!

September 2017
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September 2017