+1That $22,000 is only your money on paper! The reality is that the IRS owns that money, not you. The government co-owns a sizable part of every TIRA/Trad 401k, how much is obviously dependent on your tax bracket when you withdraw.
Sorry, I've heard others try to explain or justify conversions with the same examples.
If you don't convert your traditional IRA it continues to grow tax free on 100,000$ instead of 78,000$ you also have 22,000 more in your account without a conversion. In other words your net worth is 22,000 more. I just don't see the math any other way.
Roth money is all yours, plus no RMDs for you or your heirs. Bonus- If you pay the conversion taxes from outside the TIRA, you effectively have increased the size of your Roth- $100k tax-free in a Roth is far superior to $78k after-tax in TIRA. Yes, you're out the $22k in taxable, but that money was subject to tax drag anyway.
Statistics: Posted by RetiredAL — Sun Dec 08, 2024 9:44 am — Replies 54 — Views 3708