My wife and I are 83 and 84 years old respectively. We have a combined IRA of around $850K. I calculated that our RMD in 2015 will be $54750 with an estimated IRA balance by December of around $800K. Fortunately, with the Social Security payments and pension supplemented with taxable dividends we are able to live without the necessity of drawing money out of the IRA.

I have also calculated that if I was to convert all of the IRA in 2015 – all at once – my total tax bill on dividends from miscellaneous taxable savings + this IRA conversion + the above RMD + social security & pension minus the standard deduction and exemptions will be around $300K which I will pay by selling our taxable investments. As a follow up in subsequent years the tax bill (without the IRA & RMD) will drop to $9K

The questions are :

(a) Is it advisable at our age to convert the IRA to Roth IRA or does it makes sense to not pay this one time big bill but continue to pay out the taxes on the ever increasing RMDs.
(b) Are there any benefits in our case in spreading the conversion to Roth over two, three or four years?

My guess is that it will be a long time before I recoup the big payout to the IRS. The trade-off is any body’s guess. Fortunately, we are both in reasonably good health – at least as of now – and barring any major catastrophe plan to leave the inheritance to our two grown children.

Thanks for sharing your views on this subject