Roth conversion

[evilanne]

Hi. I am retiring in 8 mos with 2.4MM in my tsp. 34 years of service and a fers + supplement pension of about 80k per year.

My current plan is to maintain about 80/20 C vs G. The 20% right now will keep me going for approximately 5-7 years including inflation adjustments.

Beyond this I really don't have a plan and am interested in hearing about Roth conversions Etc. My tsp has really started to snowball and I am concerned about my tax burden down the line. Is it worth seeing an advisor? Anyone else in a similar position who can offer advice would be greatly appreciated. Thank you

You may want to get an advisor that will help you Roth Conversions unless you are comfortable managing it yourself. Once you hit RMDs you have little control of your income and with that much in TSP, it could throw you into a higher tax bracket with $90K to $200K in additional income. Here is a RMD calculator that you can play with https://www.calculator.net/rmd-calculat ... culate#cal You can put your action birth year and estimated rate of return
We spend so much time accumulating $$$ for retirement that we don't really think about a spending or withdrawal plan. If you are married you have a larger tax bracket to work with and it is beneficial for the surviving spouse to have money in Roth vs Traditional as single filing status is half the tax bracket.
If you plan on getting Medicare Part B, you also need to look at IRMAA 2 years prior to 65 which may put additional constraints on conversion amounts or it may result in larger cost for Medicare Part B. https://www.nerdwallet.com/article/insu ... care-irmaa

Best time to convert is when the Markets are down. I have converted several stocks this year that were in a loss position...it reduces the amount of taxes I have to pay and hopefully they will bounce back inside of the Roth account. The only downside is having to pay the taxes at all but I think in the long run it is well worth it. If there is a significant market pull back I will be looking to convert more. I am only contributing to Roth in my 401K and may convert part of that if the right opportunity arises. Unfortunately I don't believe TSP allows conversions, so you would have to rollover part of you account to an IRA to do so.

[jimcasada]

Here's new tax info for 2025. My continuing plan is convert over to Roth as much as I can while staying under the 22% bracket.

https://www.irs.gov/newsroom/irs-releas ... -year-2025

[tresrios]

We are in the process of doing Roth conversions on a yearly basic, just enough to keep us within our current tax bracket. The 1st reason, as previously noted, is to hopefully reduce the chances of being knocked into a higher tax bracket when we are forced to take Required Minimal Distribution. The 2nd reason, that I have not seen previously and consider to be equally important, is to not force our heir to go into a higher income bracket. He is, fortunately, doing well. Anything he inherits through a Traditional TSP will have to be distributed over a 10 year period and he would very likely have to pay higher taxes on all of his earnings, inherited and otherwise.