Assume whatever you want for a future marginal rate and act accordingly.The driving force is not the incidental commutative properties , not really, although your answer treats it as it is which is really misleading. Because of the progressive nature of tax you need to integrate the tax not simply use a phantom 12% bracket that no one is getting consistently. In the Future, that number is more like (Balance)*((1-40.8%)*DD) for starters when applied to large withdrawals, and at this time it is closer to (1-27.8%)*(Balance*DD). Add to that IRMAA, an additional tax,....There is no problem with RetiredAL's equation. It's just the commutative property of multiplication (see that wiki article for more).
The Roth side of the equation is on the left: it costs 12% to put the money into the Roth, after which it grows tax free.
The traditional side of the equation is on the right: it costs nothing to leave it alone, growing tax free, until you withdraw at a 12% cost.
If you think that rate will be the same as it is today, regardless of whether that is 12%, 24%, or whatever%, then in the Simplest situation it doesn't matter whether you convert now or withdraw later.
If you use a different assumption, you are likely to reach a different conclusion about your preferred (in)action this year. Whether any assumption turns out to be correct, ay, there's the rub.
Statistics: Posted by FiveK — Wed Dec 10, 2025 2:34 am — Replies 17 — Views 1354