Personal Investments • Traditional vs ROTH (IRA + 403b)

If all your money in the traditional was put during a time when you were earning within the 22% bracket, how does converting them into your ROTH change it to 12%? Wouldn't it still be taxed at the 22%? Or am I reading this wrong?

In your case, next year when you work all year you will be in the 22% federal tax bracket, based on your income. So, you can defer the 22% federal tax on the amount that you contribute to your 403b (and usually the state income tax too). Later, you will likely have some lower income years, like after you retire, where you will be in a lower tax bracket. Then, you will be able to withdraw/convert to Roth at a lower rate, like 12%. That's the situation I am in.

Statistics: Posted by mhadden1 — Tue Sep 17, 2024 11:54 pm — Replies 12 — Views 497

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