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Saturday, October 26, 2013

To Convert or Not to Convert?

Traditional to Roth?

Today I have been spending a lot of time researching different investment accounts and what works best for me in my current tax  bracket.  As of now I have 1 traditional IRA, 1 simple IRA, and my wife has a traditional IRA rolled over from her old 401k.  I think at this point in our life, and income bracket a ROTH IRA makes the most sense.   Especially because of the aggressive nature of my investments the non taxed earnings on investments seems attractive.

Action Plan:

1.)  I need to see how close I am to the top of my tax bracket with my regular income and convert accordingly as not to push myself into a higher tax bracket.  At this point it looks like I can convert about $10,000 before that additional "income" will push me over the threshold.

2.)  I have some capital loss carryovers  from my individual trading account that will allow me to reduce my income and convert a little bit more. 

3.)  I need to check into if the conversion money is treated as a contribution?  This would allow me to withdraw that amount at any time, if I see alternative invests that I am unable to fund through an IRA.

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