How Much Money Should You Convert To A Roth Each Year?

Authored by Javier Simon via The Epoch Times,

A Roth conversion allows you to turn funds in a traditional IRA into a Roth IRA. As a result, you get to enjoy qualified tax-free withdrawals in retirement. And you avoid the required minimum distributions (RMDs) that may trigger major tax consequences for retirees.

However, a Roth conversion can also set off surprise tax bombs if you convert a large enough amount. But if you convert too little, you could be letting substantial tax savings slip away.

Luckily, there's no maximum or minimum as to how much money you can convert to a Roth IRA.

So how much should you convert into a Roth IRA? Let's see what the experts say.

Convert Only Enough to Fill Lower Tax Brackets

The IRS treats the amount of money you convert into a Roth IRA as ordinary taxable income for the year in which you made the conversion.

So many financial advisers recommend you convert just enough to fill the marginal income tax bracket you're currently in without converting enough to push you into a higher one.

So let's see how you can do that step-by-step.

First, determine your taxable income for the year from all sources. This includes the following.

• Wages
• Social Security checks
• Pension payments
• Dividends and interest

Next, subtract your standard or itemized deductio