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The RMD Question
For sure the two things we know is yes it is death and taxes are coming.
However there is no current way to stop death, is there a way to reduce the amount of taxes headed to the US government and send it to our pockets from our retirement accounts? Before RMD starts what is the key amount to transfer to a ROTH yearly to maximize the amount of income. Now adjust that for a 2% inflation rate to project buying power.
Has someone put together a excel spread to show maximization of income for the following variables;
age to RMD = 7 years
number of years of RMD=26.2
projected $ amount at RMD date = 7,000,000
Growth rate in account per year during RMD 7%
Fixed Income without any at RMD = 150,000
Tax Table till RMD = current
Tax Table at RMD = 2% increase for X brackets above 100,000
Solve to maximize total income over time.
Solve to maximize buying power for FPV over time using variable inflation rate of 2%.
Graph for variable ranges; $ amount at RMD 1 to 10m, Account Growth rate 4 to 10%, age to RMD 1 to 10 years,
Yes and exclude any, charities, longevity insurance, or foundation reductions, etc
I don't want reinvent the wheel if this has already been done.
Hard to do this in one single spreadsheet where you click just one button and everything is optimized for you.
It's likely more trial and error. You will do best if you roughly equalize your taxable income throughout your retirement. To do that, you'd likely do Roth conversions before RMD and SocSec start.
Not a judgement, but that is why I don't want to be 65 with 7M. Much better to stop at 2-3M at 50. Then 22 years to convert at low tax rate.
Seems at 7M you just convert as much as you can (and maximize during drops), start being charitable, and realize taxes will be bad starting at 75 or so. Don't want to be paying 12% now then 35% at 75, so balance tax rates over time.
@navypack More money, more problems! 🙂
Yeah, it's really important to do aggressive Roth conversions now to fill up the lower tax brackets now!
@earlyretirementnowcom my issue is that I am still working in HCOL area, so conversions are not great right now.
Every year raises 401k/IRA value and takes away a year for conversion. I am using your sheet to back calculate from 72 (RMDs) to reach maximum value. Much more challenging with pension at 58 mixed in the middle.
Good news is worst case for me is RMDs at same tax bracket as now.
