Partial Roth Conversion
We have a client that has a Traditional Ira that he wants to conver to a Roth. Can he do a partial conversion over several years, or does it have to be all at one time?
We have a client that has a Traditional Ira that he wants to conver to a Roth. Can he do a partial conversion over several years, or does it have to be all at one time?
Permalink Submitted by Alan - IRA critic on Thu, 2022-02-10 22:58
He can convert partial amounts, and usually that is better because a total conversion tends to spike the marginal tax rate for the conversion year unless the balance is very modest. A popular strategy is to convert up to the top of the current tax bracket to avoid higher brackets. Each year the client should aim to convert when the rate they will owe for the conversion would be less or in some cases not higher than the expected rate in retirement if client didn’t convert and RMDs were therefore higher. Client can also do multiple conversions in a single year if they wish. They will then get a single 1099R with the total amounts converted if they all came from the same IRA account.