Sentences with phrase «owner is in a lower tax bracket»

Distributions can be withdrawn later when the account owner is in a lower tax bracket.

Not exact matches

So, for example, if you take the same scenario described above but assume the beneficiary is in a lower tax bracket — say, 15 % for the beneficiary vs. 28 % for the account owner — the traditional IRA plus taxable account comes out slightly ahead of the Roth, albeit the margin is small, about 1 %, or $ 344,000 vs. $ 340,000.

Fortunately, though, the decision to do a Roth conversion doesn't have to be «all or none» — and in fact, not only is a «partial» Roth conversion permitted, but in practice it's often the optimal strategy, allowing retirement account owners to convert just enough to fill the lower tax brackets, without causing «too much» income that would trigger the top tax brackets.

For IRA accounts that are projected to be large — where RMDs can propel the IRA owner into the top tax brackets — a partial Roth conversion is appealing to benefit from lower tax brackets today and avoid the higher ones in the future.