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Topics - mrjondoe

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Taxes / Help with No Tax Withdrawal Plan
« on: October 23, 2018, 09:05:44 PM »
Hey all - I'm about 50% towards reaching my FI number, so I've been spending more of my time focusing on the withdrawal phase. I have a question about the actual implementation of the Roth IRA Conversion Ladder and specifically paying no / low taxes.  I've heard the limit being around ~$100k / year during the conversion phase several times on this blog, other blogs, and podcasts.

However, as I actually look at the tax tables and run the numbers, I can't get $0 taxes at any income over $24k for MFJ no kids (standard deduction). I understand the no tax on 401k contributions, and withdrawal of Roth IRA conversions at 0% (same as Roth Contributions).

Assumptions / Math:
1) Convert $70k per year from 401k to Roth IRA
2) MFJ with 2 kids
3) 70k income - standard deduction of 24k = 46k of income
4) 46k income = $5,139 in taxes
5) 2 kids = 4k in child tax credits
6) total tax = $1,139 (Conversion amount only)
7) +15% of qualified dividends and capital gains on selling brokerage (for first 5 years, and I haven't done the math here to guess what % div, capital gains, vs contributions)

Am I missing something here?

I know that's not a huge amount of tax (and much better than my last plan), but it will slightly affect the FI number and drawdown rate.

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