Reply To: Roth Conversion

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Alan S.

Your taxable SS income increases as your other income including conversions also increases. If 85% of your SS income is taxable, the effective marginal rate in the 12% bracket is 22.2%, and if you enter the 22% bracket, it is 40.7%.

Once 85% of your SS income is absorbed, your marginal rate then drops back to 22% in many cases. Because of the complexity of these calculations, the best way to determine how much to convert is to use a tax program, and get your total tax for different conversion amounts. The amount of increase from one conversion amount to the next higher one you model divided by the additional amount converted generates your marginal rate for the additional conversion amount.

Here is a fairly simple calculator for 2020 you could use to determine the effect of different conversion amounts this year:

  • This reply was modified 1 year, 2 months ago by Alan S..