Timing partial IRA Roth conversions
I am 68 and want to take advantage of the SECURE Act extension on starting RMD distributions. I have both a Rollover IRA and just opened a new Roth IRA with the same company. Since a complete conversion to the Roth would put me over the base Medicare IRMAA income limit, I plan on making yearly conversions until I have to start taking RMDs from the IRA when I turn 72.
My question is this:
Since the conversions from the IRA to the Roth would be done using ‘in kind’ assets at the share level, should I time my conversions during stock market dips so that more shares are converted per taxable dollar? Hopefully, this will maximize the total the dollar amount of the conversions as the assets cycle back up in value.
Also, what is the status of the SECURE ACT 2.0 bill that will extend the RMD age further?
Permalink Submitted by Alan - IRA critic on Fri, 2021-05-28 21:58
Secure 2.0 looks like a go, but you can never assume anything until it is actually signed into law.
Converting during dips requires the luck of market timing, which no one can consistently execute without being lucky most of the time. But converting when shares are lower is beneficial if you can pull it off. If you convert in kind, the conversion total will not be a totally predictable rounded amount, but that does not really matter unless you want a rounded number (eg a multiple of 1000) for your conversion. Remember that your 2021 MAGI will be used to determine your 2023 Medicare premium, but the 2023 threshold might be a little higher due to inflation adjustments.