Taxes: How do I know how much to convert to Roth from a Traditional IRA? See my 2024 conversion.

The speaker details their strategy for Roth IRA conversions in 2024, aiming to maximize tax benefits by filling the 24% tax bracket. This approach is based on their long-term tax projections considering factors like average stock market returns and the potential extension of the Tax Cuts and Jobs Act, enabling them to minimize future tax liabilities in retirement.

Tax bracket strategy

• 00:00:00 The speaker is planning to convert a portion of their Traditional IRA to a Roth IRA in 2024. They are strategically aiming to fill the 24% tax bracket by paying the taxes associated with the conversion, which they believe will minimize their future tax burden in retirement. Their decision is based on their long-term tax projections and predictions of future tax laws, specifically around the Tax Cuts and Jobs Act.

Tax Cuts and Jobs Act

• 00:01:30 The speaker considers the potential impact of the Trump-era Tax Cuts and Jobs Act on their decision. They believe there's a strong possibility that the Act's provisions will be extended, possibly for at least 10 years. This anticipation influences their decision to utilize the current 24% tax bracket, as they anticipate it could change in the future if the Act's provisions expire or are modified.

Software for Tax Projections

• 00:00:06 The speaker uses software called Bolin to project their future tax liabilities. Bolin allows them to input variables such as average stock market returns, tax bracket expectations, and potential tax law changes. Based on these inputs, Bolin generates tax projections, assisting them in making informed decisions regarding their Roth IRA conversions.

Paying Estimated Taxes

• 00:05:09 The speaker pays their federal and state estimated taxes online. They use the EFTPS.gov website for federal taxes and a website called IN.gov for state taxes in Indiana. They have a bank account linked to both sites, enabling them to make online payments quickly. They emphasize the importance of timely tax payments and the potential penalties for late payments or failure to pay quarterly taxes.

Personal Tax Decision

• 00:07:35 The speaker shares their personal tax decision for 2024. Their decision is based on their vision for their financial future. They conclude that understanding tax implications and having a proactive approach towards tax planning is critical, particularly in the years leading up to the required minimum distribution (RMD) age.