IRAs are individual, so your dad's required beginning date will be in 2025, if your mom has an IRA, her required beginning date will be 2026.
So there is still time for a Roth conversion this year. A starting point would be to look at doing a Roth Conversion this year of an amount similar to what RMD will be. RMDs ramp up as age goes up, so the initial values of less than 4% are relative bargains. The boglehead's Retiree Portfolio Model spreadsheet is a pretty goo tool for evaluating the math. I use the Pralanaretirementcalculator, currently a paid Excel sheet, but will be on on-line tool soon. That has some optimizer routines that might or might speed up the calculation for you.
Note that they haven't made estimated tax payments so far to cover this, so look into using an Indirect Rollover. You make a withdrawal from the IRA to cover the taxes and have the maximum withheld that your custodian allows (Vanguard allows 99% to be withheld). Then if there is a taxable account, within 60 days, write a check from taxable and put that money back into the IRA, making sure to tell the custodian company that it is an Indirect Rollover. That's completely legal (once per 12 months) and since the money went to the government via withholding, it is deemed by the IRS to be timely, so no penalties for paying late.
Once RMDs start next year, I would likely only convert up to the IRMAA tier or tax bracket that they are already in, but again you have to calculate it.
So there is still time for a Roth conversion this year. A starting point would be to look at doing a Roth Conversion this year of an amount similar to what RMD will be. RMDs ramp up as age goes up, so the initial values of less than 4% are relative bargains. The boglehead's Retiree Portfolio Model spreadsheet is a pretty goo tool for evaluating the math. I use the Pralanaretirementcalculator, currently a paid Excel sheet, but will be on on-line tool soon. That has some optimizer routines that might or might speed up the calculation for you.
Note that they haven't made estimated tax payments so far to cover this, so look into using an Indirect Rollover. You make a withdrawal from the IRA to cover the taxes and have the maximum withheld that your custodian allows (Vanguard allows 99% to be withheld). Then if there is a taxable account, within 60 days, write a check from taxable and put that money back into the IRA, making sure to tell the custodian company that it is an Indirect Rollover. That's completely legal (once per 12 months) and since the money went to the government via withholding, it is deemed by the IRS to be timely, so no penalties for paying late.
Once RMDs start next year, I would likely only convert up to the IRMAA tier or tax bracket that they are already in, but again you have to calculate it.
Statistics: Posted by Exchme — Mon Aug 26, 2024 2:56 pm — Replies 2 — Views 124