My wife (age 59) and I (also 59) currently max out pre-tax contributions ($26K) to my 401(k) and also max out back-door (after-tax $7K from my IRA to my Roth IRA) and mega-back door (after-tax ~$32K from my 401(k) to my Roth IRA) contributions each year. We also contribute the max non-deductible ($7K) to my wife’s IRA each year. My wife currently has no Roth IRA but I’m considering converting in the range of $25K to $50K (open to other considerations) of my wife’s IRA ($47K basis out of ~$350K balance) to a Roth IRA this year. I figure we have plenty of time until we claim SS at age 70 and have ample non-retirement funds to pay the additional taxes due from such conversion. I’m just trying to begin the process to fund Roth IRAs prior to RMD’s beginning at age 72.

I understand in general the other considerations related to current federal tax bracket (2019: 37%, 2020: 35%, 2021: 37%) versus the federal tax bracket when I retire between the ages of 60 to 65 (Possibly 32% but probably 35%), and the impact of the net investment tax (3.8%) which we otherwise are impacted each year and I expect to be impacted in retirement.

My question is will such conversion be taxable by the state of Illinois if we begin this process after my wife is 59.5 later this year. My understanding is IL does not tax “certain retirement plan income”.

Thank you for your feedback.