Entering large Roth conversions

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Last Post by Stuart Matthews 5 years ago

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Donald Heffernan

(@donheffernanyahoo-com)

New Member Customer

Joined: 5 years ago

Posts: 3

Topic starter February 12, 2022 6:17 pm

I have been evaluating various Roth conversion strategies with the Analysis wizard. It has been very useful. Can I bypass the user manual and just ask how I can manually enter a mega Roth conversion for this year or next so I can then run scenarios about impact of early death, etc? I have actually read the manual but that how to topic escaped me. Also, is there any way to direct where you want it pull from to pay the taxes? To a degree this can be accomplished by setting the global priority (e.g. YouTD, SpouseTD, Taxable, Roth) but I haven't yet figured out if that is the same as simply directing it to tax all the tax moneys from YouTD. If it will do just that provided the funds are available in the priority source, then my question is answered. If that was clearly answered in the manual then I apologize for not fully digesting when I RTFM. 😉 Similarly can I manually enter a transaction that would specifically withdraw a YouTD sum and put the proceeds into taxable? There is a particular situation that could interest me in doing that if one of us became terminally ill in a few years.

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Roth conversion manual transactions

Stuart Matthews

(@smatthews51)

Member Admin

Joined: 6 years ago

Posts: 618

February 13, 2022 5:06 pm

Donald,

Regarding creation of a mega Roth conversion, there's no way to cause that outside the parameters on the Roth Conversions page. Within that restriction, you might be able to get rather large annual conversions by using the top tax bracket with no IRMAA or FPL limits. There's no way to direct where the taxes come from other than the standard mechanism: Taxes are an expense and they're combined with your other expenses and your income to determine cash flow. If that cash flow is negative, the withdrawal priority specified on the Financial Assets > Management page determines where the withdrawals are made to cover the deficit spending. With that said, you can use the Scheduled Withdrawals table on the FA > Management page to specify withdrawals from selected accounts, and those funds will go into your cash account first and, depending on its balance and the specified cash ceiling level (again, on the FA > Management page), overflow deposits will roll over to your regular account.

Stuart

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