Aged 65, filing Jointly, approx $236,000 gross income. I have 2(two) 457(b) plans- toying with rolling them to IRA then Roth IRA to eventually lowering IHRMA in 2-3 years. Not sure if income limits apply to such a transaction. Pretty sure I couldn’t touch the new accounts for 5 years-I have existing Roth IRA’s but pretty sure I can’t roll the 457 money into those. Not sure if any of thgis is wise.
If your first Roth contribution was in 2018, the 5 years would have been completed on 12/31/2022. If prior to 2018 it was completed even sooner. You also must have reached 59.5 for your all your Roth accounts to be qualified, and you have.
Thanks. Some have said I should just draw out the 457 withdrawls over the future…..I’m overthinking by one big 457 transfer hit to a roth it so that a big tax hit in 2023 means a substantil IRMA hit in 2025 and then after that smaller IRMA surcharges. My spouse and I had a gross income of 236 K in 2021 but I don’t think the hi income affects rollovers ( just contributions, right?) such as the kind I’m contimplating.
There are no income limits for conversions or other IRA rollovers. You are correct that taxable conversions will increase your MAGI for IRMAA purposes 2 tax years later, but these conversions will reduce your future RMDs, future taxable income, and IRMAA exposure in all later years. Eventually you make back the added taxes and IRMAA surcharges incurred up front.
Lastly, I have two(2) 457(b) plans – from two seperate former government employers….I’m almost seeing that you can only do One roleover per year and not roll both of the two seperate 457 plans into Roths…..once again I can’t exactly recall where/if I saw this but I wonder what reality is regarding two 457(b) plans being rolled over within the same year.
Permalink Submitted by Alan - IRA critic on Wed, 2023-02-01 00:27
There are no income limits for Roth conversions. You can convert into an existing Roth IRA since all your Roth IRAs are treated as a single combined account. If your first Roth IRA contribution was prior to 2019 your Roths are qualified and tax free including any new conversions or contributions. As for the amount of conversions, you should generally convert if your current marginal rate is lower than expected in the future, not convert if it is higher, and if about the same it’s a toss up probably calling for a more modest conversion. The goal is to level out your taxable income each year from now into the future. You might treat IRMAA surcharges as an addition to your marginal tax rate.
Permalink Submitted by Stuart Alpern on Wed, 2023-02-01 11:43
I’m happy to see your response-but- I keep hearing contrary from your opinion from, of course, financial institutions—I’m especially worried about a new 5 year no touch issue.But assuming you are correct, do I put it into an existing roth or create a new acct at perhaps a different financial instn? Also can you provide some authority for your opinion? ( I’m a retired attorney!)