Any accountants out there knowledgeable about U.S. tax returns?

[skatewash]

1 hour ago, TallGuyJohninBKK said:

Anyone else out there been wrestling with the foreign exchange rate issue for your federal taxes.

 

I was dealing with that today, and unhappily started out being reminded that several of my Thai banks only allow 6 months past access to your account transaction history online, meaning back to October last year, at this point. Which really doesn't help when you're trying to tally interest payments for the 2016 calendar year.

 

And then I noticed the IRS has a webpage where they claim to list the yearly average exchange rates between the U.S. $ and the various foreign currencies for the years 2010 to 2016, at present. They're showing the 2016 average exchange rate for the THB at 36.778!!!   I wonder how they came up with that kind of rate, but it does serve as a benefit when doing your taxes, since the higher rate makes your baht interest equate to lower amounts in U.S. $ for tax purposes.

 

https://www.irs.gov/individuals/international-taxpayers/yearly-average-currency-exchange-rates

 

The Treasury Department's 2016 year-end report for currency exchange shows the THB rate at 35.7700, which seems a lot more realistic based on personal experience from the past year.

 

I also looked at the U.S. Federal Reserve bank's daily exchange rates site for the THB for 2016, and those rates barely got above 36 all year, except for a couple weeks in January where the highest daily number I saw was 36.33. That chart shows the rates ranging in the 35s most of the year, and dropping into the higher 34s at various points.

 

https://www.federalreserve.gov/releases/h10/hist/dat00_th.htm

 

But hey, if the IRS is suggesting I use their higher 2016 average rate for preparing my taxes, thus somewhat lowering the taxable value of THB interest payments, who am I to argue with that?

I think your conclusions are correct and you would be justified in using the 36.778 Baht to US Dollar exchange rate (average yearly exchange rate for 2016 according to the IRS) as long as you apply that rate consistently.  I agree it's an absolutely insane number and must, in fact, be a mistake, but I think you would be justified in relying on that "mistake" to file your tax return.  The effect as you point out would be to minimize your Thai income compared to a more realistic exchange rate.

The gold standard of doing the exchange rate calculations is to do the following, that is, use the spot rate in effect when you receive or accrue the item:

 

 https://www.irs.gov/individuals/international-taxpayers/yearly-average-currency-exchange-rates

Quote

You must express the amounts you report on your U.S. tax return in U.S. dollars. Therefore, you must translate foreign currency into U.S. dollars if you receive income or pay expenses in a foreign currency. In general, use the exchange rate prevailing (i.e., the spot rate) when you receive, pay or accrue the item. [emphasis added]

 

As to your point about the inability of obtaining account information online from Thai banks greater than six months ago, that is my experience with Bangkok Bank and Krungsri Bank.  Not possible to do that online.  You could get that information from the bank itself by paying a fee, or you could reference your passbook if you keep that up-to-date over the course of the year (I do the latter).

 

What I do myself is at the beginning of January make sure my passbooks are up-to-date (that is, reflect all activity for end of the previous calendar year).  Go through those passbooks looking for interest received, taxes withheld, and highest balance.  I use that information to prepare my FBAR which I file very early in January because I have all the necessary information to do so.  I use this page (http://www.bangkokbank.com/BangkokBank/WebServices/Rates/Pages/FX_Rates.aspx) from Bangkok Bank to get the Selling Rates (Bill-DD-TT) exchange rate of Baht into US Dollar for the date of each transaction of interest in my passbook.  I also keep the total interest amounts in Dollars for use in filing my tax return (which I do much later in the year).

Anyway, that's what I do.  However, I don't believe it is required to do it that way and I believe the IRS would accept what you are doing (relying on their yearly average exchange rate) as an acceptable simplifying assumption.  Again, as long as you use it consistently.  In other words, you would not be able to use one rate for your interest earned and another rate for any investment expenses you may have.  As long as you consistently apply it and can point to where you obtained the exchange rate I think you're in good standing.

As a final aside, I was once sent to Bangkok on business with a US government per diem for lodging and meals which was absolutely insane.  The numbers might have made sense for Tokyo or NYC but were several times more generous than was necessary for actual expenses in Bangkok.  As we got to keep the per diem regardless of actual expenses, I didn't complain!  Maybe the US government confused Thailand with Taiwan, I hear that's a common mistake ;-)

Edited April 17, 2017 by skatewash
grammar

[TallGuyJohninBKK]

1 hour ago, skatewash said:

As to your point about the inability of obtaining account information online from Thai banks greater than six months ago, that is my experience with Bangkok Bank and Krungsri Bank.  Not possible to do that online.  You could get that information from the bank itself by paying a fee, or you could reference your passbook if you keep that up-to-date over the course of the year (I do the latter).

 

 

Indeed, the two I happened to be dealing with in particular were BKKB and Krungsri, and that kind of deal for online banking -- 6 months past access only to transactions -- is LOUSY!!!

 

I ended up calling both of their customer service lines to inquire further, and was told by their CSRs there that they (the CSRs) didn't have access to anything further back that they could tell me over the phone. And they weren't even sure that the staff in my home branches could go back further. Instead, both talked about having to request a printed statement from the HQ of the two banks, which of course has a fee and takes a couple days to produce.  B!!!!  S!!!!

 

Then later in the day, the wife and I piled together all my Thai bank books -- which I never use for anything and rarely make their way out of the closet -- and headed off to the local mall to update them in the printer machines at the respective banks.  In BKKB's case, their machine would only print the details of the past 30 days, not even any further back than that. B!!!! S!!!!

 

Edited April 17, 2017 by TallGuyJohninBKK

[skatewash]

Yeah, the lack of account information online is ridiculous.  A workaround is to set an alarm in your calendar for June 1 and December 31.  Go online to your bank site and download a statement for the previous six months of the year each time.  It's silly to have to do it that way, but it does work. LOL  

 

About updating the passbooks it's true that it will consolidate activity into a single entry if you don't regularly update the passbook.  Annoying.  I bring my passbooks whenever I visit my banks in person and update each using the automated machine for that purpose.  Again, it's silly to have to do that, but it does work.

Edited April 17, 2017 by skatewash
added comment

[TallGuyJohninBKK]

Should have added to all of the above, of course, also no monthly or even quarterly account statements that are either mailed or produced online that you can print and save -- unlike any other bank outside Thailand that I've ever dealt with.

 

But as to the main subject of the thread: just trying to obtain and then calculate the monthly interest credits from my several interest-paying Thai bank accounts has taken more time, just by itself, than the entire rest of the process of preparing my federal tax return. That's B!!!! S!!!!!

Edited April 17, 2017 by TallGuyJohninBKK

[gk10002000]

On ‎4‎/‎10‎/‎2017 at 9:41 AM, skatewash said:

I thought I received an official email last year, but have not received one this year.  

I routinely file for the extension every year because I routinely convert a part of my traditional IRA to a Roth IRA and then recharacterize a portion of that conversion back to my traditional IRA when I figure out exactly what my taxes are each year.  I need to know my exact taxable income before I can know how much of my conversion to recharacterize and be below the threshold to pay any income taxes on my income.  Each year it's a slightly different amount, but steadily I'm converting money from my tax deferred accounts to my tax free accounts, a little bit at a time, year by year.  The recharacterization request is a paper-based application (not sure because that's legally required or just the procedure my custodian follows) and I have to wait to receive a confirmation that the recharacterization is completed because it will inform me the actual amount of the transfer from Roth IRA back to traditional IRA (that is, the portion of my original conversion recharacterized, plus any related earnings or minus any related losses, which the custodian calculates for me) in order to put an explanatory notation in my income tax return.  This all takes time and I'm rarely able to get everything done by the normal filing deadline, hence the request for extension of filing deadline.  This year I will probably be able to file before the June 15 date, which extension is automatic for a US taxpayer residing abroad so all should be well either way (whether I actually received the extension to October 16 or not).

Skatewash, I understand what you are doing, and most likely keeping your income low every year and thus being in a lower tax bracket every year.  I plan to be doing a very similar thing.  But I am also thinking that as I take the money out of my traditional IRA, there isn't a lot gained by converting it to my Roth.  I am thinking I just withdraw whatever I need for the year or so, but instead of putting that into the Roth, I would just invest the money in regular Brokerage account where I have all my tax free municipal funds and ETFs and the monies I earn will be tax free. So unless one wanted to do more with the money like buy and trade stocks or options or whatever, I am thinking there is not a lot of need to convert the traditional IRA monies to the Roth IRA monies. 

[Langsuan Man]

14 hours ago, gk10002000 said:

Skatewash, I understand what you are doing, and most likely keeping your income low every year and thus being in a lower tax bracket every year.  I plan to be doing a very similar thing.  But I am also thinking that as I take the money out of my traditional IRA, there isn't a lot gained by converting it to my Roth.  I am thinking I just withdraw whatever I need for the year or so, but instead of putting that into the Roth, I would just invest the money in regular Brokerage account where I have all my tax free municipal funds and ETFs and the monies I earn will be tax free. So unless one wanted to do more with the money like buy and trade stocks or options or whatever, I am thinking there is not a lot of need to convert the traditional IRA monies to the Roth IRA monies. 

If you are getting Medicare Part B don't forget your tax free income will still be counted towards your MAGI (modified adjusted gross income) since Medicare premiums are not considered "taxes" so Medicare is allowed to use that income in order to determine your IRMAA (income related monthly adjustment amount).  

 

The main advantage of converting traditional IRA to a Roth is that down the line when you hit 70 and a half you will then be subject to RMA (required minimum distribution).  If your funds are in a Roth you are exempt from the RMA and the MAGI 

[skatewash]

14 hours ago, gk10002000 said:

Skatewash, I understand what you are doing, and most likely keeping your income low every year and thus being in a lower tax bracket every year.  I plan to be doing a very similar thing.  But I am also thinking that as I take the money out of my traditional IRA, there isn't a lot gained by converting it to my Roth.  I am thinking I just withdraw whatever I need for the year or so, but instead of putting that into the Roth, I would just invest the money in regular Brokerage account where I have all my tax free municipal funds and ETFs and the monies I earn will be tax free. So unless one wanted to do more with the money like buy and trade stocks or options or whatever, I am thinking there is not a lot of need to convert the traditional IRA monies to the Roth IRA monies. 

If you are under 59 1/2 years of age you will be hit with a 10% penalty of the amount you withdraw from your traditional IRA (unless you meet the requirements of one of the exceptions to this rule, see:  https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions).  That 10% penalty is not assessed if you do a conversion from a traditional IRA to a Roth IRA.

Normally, there is a decision one must make when doing conversions from a traditional IRA to a Roth IRA.  Do I want to pay taxes now (at a potentially lower tax rate than later) or do I want to pay taxes later (at a potentially higher tax rate than now)?  But as I am retired and have no earned income, I can take advantage of the tax shelter provided by the standard deduction and personal allowance ($6,300 + $4,050 = $10,350) for my single filing status to do a conversion at a 0% tax rate (i.e., tax-free) as long as I do not try to convert more than $10,350 (less any income, for example, from interest or dividends).  In other words, there is an amount of money (less than $10,350 as explained above) that I can choose to leave on the table (do nothing) or take advantage and convert that amount of money from my traditional IRA to a Roth IRA.  I choose to take advantage.  There is no cost to me in doing so other than the time spent making the calculations for my tax return.  Doing this every year makes the actual work each year pretty minimal (it's a repetition of the previous year with slightly different amounts).

The money in the Roth IRA can be invested in anything (including tax-exempt municipal funds -- although, of course, that would be foolish as the Roth IRA is itself exempt from taxes).  More specifically I can invest in equities which historically have had a much higher (although correspondingly more volatile) average return than tax-exempt municipal funds.  

This strategy (tax free conversions from traditional to Roth IRA) isn't available to everyone.  It requires that you have less income than you are allowed to have tax free given your standard deduction and personal exemption based on your filing status.  In my case, that's $10,350 (less any other income I may have from for example, interest and dividends).  For someone in my situation it's pretty close to a no-brainer.

[TallGuyJohninBKK]

16 hours ago, gk10002000 said:

I would just invest the money in regular Brokerage account where I have all my tax free municipal funds and ETFs and the monies I earn will be tax free. So unless one wanted to do more with the money like buy and trade stocks or options or whatever, I am thinking there is not a lot of need to convert the traditional IRA monies to the Roth IRA monies. 

Not everyone wants to keep the entirety or much of their investment portfolio in tax free municipal funds and such.... That's one reason to consider Roths.

[TallGuyJohninBKK]

2 hours ago, skatewash said:

This strategy (tax free conversions from traditional to Roth IRA) isn't available to everyone.  It requires that you have less income than you are allowed to have tax free given your standard deduction and personal exemption based on your filing status.  In my case, that's $10,350 (less any other income I may have from for example, interest and dividends).  For someone in my situation it's pretty close to a no-brainer.

Yes, I appreciated your suggestion and method explained above. And I read the articles you linked above.

 

One key element there is NOT having taxable income above your total of deductions, credits, exemptions.  I'm not sure that applies to the majority of people.

 

In my case, I have a government pension that is taxable, and thus am above the deductions, credits, exemptions total from the get-go.

 

So in my case, I can convert portions of my IRAs to my existing Roth. And if I do so, I want to make sure the added conversion amount doesn't push me into a higher tax range. (Fortunately, I've got a decent amount of space between my current taxable income amount and the top of my current tax bracket.)

 

But, because my base taxable income is over my deductions, credits, exemptions total, any Roth conversion I do I'm going to be paying my current marginal tax rate on those converted funds. So it wouldn't be a tax-free conversion. But it might be ones that make sense to do gradually, in small amounts, year after year, making sure the converted amounts never push me into a higher tax bracket.

 

Another difference between the traditional IRA and the Roth IRAs, BTW, is the Roth IRAs have no required minimum distribution once you get older. You can keep the funds in a Roth IRA for as long as you like, letting them compound and grow tax-free....   Of course, if you die early/soon, then that doesn't end up being much of a benefit!!! 

 

PS - My elderly father right now is having to take RMDs from one of his traditional IRAs that adds to his taxable income and thus annual tax bill. He doesn't need the money/income from that IRA because he has a pension and Social Security. But he's having to take it as added taxable income anyway, because that's one of the rules of traditional IRAs. 

 

 

 

Edited April 18, 2017 by TallGuyJohninBKK

[TallGuyJohninBKK]

BTW, I ran into an odd and troublesome problem with the online version of TurboTax that apparently is a glitch in their online system. Spend 4 hours on the phone with TT support (to their credit, they hung in), and the only way they were able to solve the problem was to give me the downloaded (vs. online) version of their software to install and use on my PC. The tax rep I was on the phone with said the online version runs into problems sometimes with more detailed/complex/unusual return situations that only can be resolved with the added editing/adjusting flexibility in the download version.

 

Just FYI, in my case, the problem with their online version was: it kept wanting to assess a $695 ACA penalty against my married filing separate return with a U.S. mailing address, as soon as I added my Thai wife as a 2nd personal exemption on my return (which is allowed because she's a non-resident alien and has zero U.S. income). In the online version, seemingly, there was no way to get TT to recognize that she is exempt from ACA because she's a non-U.S. citizen/non-resident alien. The online version allowed me to claim the proper ACA exemptions for me (non resident, 330 days+ out of the U.S.), but it wouldn't allow the same for her.

 

In the download version, we were able to go into a more detailed worksheet for her personal information, and where it asked for her state of residence code, enter TH which is apparently the country code for Thailand with TurboTax and/or the IRS. As soon as we did that, and then went back to the Form 8965 for ACA exemptions, it unlocked the exemption section for her, and we were able to code in the "C" exemption which is the one that applies to non-U.S. citizen, non-resident aliens as well as U.S. citizens who are exempt from ACA either because their tax home is outside the U.S. or they meet the 330+ days outside the U.S. physical presence test.

 

After that, the $695 ACA penalty disappeared and all was right with the tax world... Except, it was 5 am in the morning this morning at that point... 

 

 

[gk10002000]

7 hours ago, skatewash said:

If you are under 59 1/2 years of age you will be hit with a 10% penalty of the amount you withdraw from your traditional IRA (unless you meet the requirements of one of the exceptions to this rule, see:  https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions).  That 10% penalty is not assessed if you do a conversion from a traditional IRA to a Roth IRA.

Normally, there is a decision one must make when doing conversions from a traditional IRA to a Roth IRA.  Do I want to pay taxes now (at a potentially lower tax rate than later) or do I want to pay taxes later (at a potentially higher tax rate than now)?  But as I am retired and have no earned income, I can take advantage of the tax shelter provided by the standard deduction and personal allowance ($6,300 + $4,050 = $10,350) for my single filing status to do a conversion at a 0% tax rate (i.e., tax-free) as long as I do not try to convert more than $10,350 (less any income, for example, from interest or dividends).  In other words, there is an amount of money (less than $10,350 as explained above) that I can choose to leave on the table (do nothing) or take advantage and convert that amount of money from my traditional IRA to a Roth IRA.  I choose to take advantage.  There is no cost to me in doing so other than the time spent making the calculations for my tax return.  Doing this every year makes the actual work each year pretty minimal (it's a repetition of the previous year with slightly different amounts).

The money in the Roth IRA can be invested in anything (including tax-exempt municipal funds -- although, of course, that would be foolish as the Roth IRA is itself exempt from taxes).  More specifically I can invest in equities which historically have had a much higher (although correspondingly more volatile) average return than tax-exempt municipal funds.  

This strategy (tax free conversions from traditional to Roth IRA) isn't available to everyone.  It requires that you have less income than you are allowed to have tax free given your standard deduction and personal exemption based on your filing status.  In my case, that's $10,350 (less any other income I may have from for example, interest and dividends).  For someone in my situation it's pretty close to a no-brainer.

Agreed.  I am over 59 1/2 so a conversion vs. withdrawal isn't an issue for me tax-wise. 

[gk10002000]

5 hours ago, TallGuyJohninBKK said:

Not everyone wants to keep the entirety or much of their investment portfolio in tax free municipal funds and such.... That's one reason to consider Roths.

I understand.  But if one is taking out yearly withdrawals, it really is not the entire investment portfolio. It is or living expenses year to year and to keep the yearly tax bill low

[gk10002000]

7 hours ago, Langsuan Man said:

If you are getting Medicare Part B don't forget your tax free income will still be counted towards your MAGI (modified adjusted gross income) since Medicare premiums are not considered "taxes" so Medicare is allowed to use that income in order to determine your IRMAA (income related monthly adjustment amount).  

 

The main advantage of converting traditional IRA to a Roth is that down the line when you hit 70 and a half you will then be subject to RMA (required minimum distribution).  If your funds are in a Roth you are exempt from the RMA and the MAGI 

I am aware of MAGI an I have looked at it several times, but the descriptions I have seen do not include tax free income.  Below is a snippet from Turbo Tax

 

 

To calculate your modified adjusted gross income, take your AGI and add back certain deductions. Many of these deductions are rare, so it's possible your AGI and MAGI can be identical. According to the IRS, your MAGI is your AGI with the addition of the following deductions, if applicable:

• Student loan interest
• One-half of self-employment tax
• Qualified tuition expenses
• Tuition and fees deduction
• Passive loss or passive income
• IRA contributions, taxable social security payments
• The exclusion for income from U.S. savings bonds
• The exclusion under 137 for adoption expenses
• Rental losses
• Any overall loss from a publicly traded partnership

[Langsuan Man]

Well, I got the notice from Medicare and they explained that tax free municipals are included in the Magi formula.

And since I am paying the IRMAA every month I feel they know more than a poster at TV. They take it out of my SS so it is not like I have any choice in the matter

Sent from my Nexus 5X using Thaivisa Connect mobile app

[skatewash]

35 minutes ago, gk10002000 said:

I am aware of MAGI an I have looked at it several times, but the descriptions I have seen do not include tax free income.  Below is a snippet from Turbo Tax

 

 

To calculate your modified adjusted gross income, take your AGI and add back certain deductions. Many of these deductions are rare, so it's possible your AGI and MAGI can be identical. According to the IRS, your MAGI is your AGI with the addition of the following deductions, if applicable:

• Student loan interest
• One-half of self-employment tax
• Qualified tuition expenses
• Tuition and fees deduction
• Passive loss or passive income
• IRA contributions, taxable social security payments
• The exclusion for income from U.S. savings bonds
• The exclusion under 137 for adoption expenses
• Rental losses
• Any overall loss from a publicly traded partnership

I think that snippet from TurboTax might be misleading in terms of what is included in MAGI.  My understanding is that MAGI does specifically include tax-exempt interest.  Here's a quote from the Internal Revenue Code ((d)(2)(B)) :

Quote

 

(B) Modified adjusted gross income

The term “modified adjusted gross income” means adjusted gross income increased by—

 

(i) any amount excluded from gross income under section 911,

(ii) any amount of interest received or accrued by the taxpayer during the taxable year which is exempt from tax, and

(iii) amount equal to the portion of the taxpayer’s social security benefits (as defined in section 86(d)) which is not included in gross income under section 86 for the taxable year.

 

 

[gk10002000]

2 hours ago, skatewash said:

I think that snippet from TurboTax might be misleading in terms of what is included in MAGI.  My understanding is that MAGI does specifically include tax-exempt interest.  Here's a quote from the Internal Revenue Code ((d)(2)(B)) :

 

Interesting.  And I am sure when checked the Obamacare health care site did not include all those things in MAGI. So obviously different agencies and companies are not saying the same thing, even though they may mean to.  Something to keep track of and be aware of for sure.   This does make a big difference.  I thought I checked on how "income" for Social Security is taxed, but now I will double and triple check that and other things.  I do have a lot of tax free muni bonds and funds and ETFs.   Thanks all. 

[NancyL]

Interesting discussion on pulling funds out of traditional IRA and moving into Roth IRA.  I hadn't thought about this.  Right now, we're at relatively low income in the 15% tax bracket on Hubby's SS and private pension, and not at the upper limit on income in that bracket.  Within 2 years my private pension will "have" to start, pushing us up to the 25%.  Yeah, a good problem to have.  Would it make sense to move some funds now while we're still in a lower tax bracket?

[TallGuyJohninBKK]

Nancy, I think almost any financial adviser would tell you, the decision about whether or not to convert funds from a traditional IRA to a Roth IRA -- either entirely or more likely slowly over a period of years through repeated partial conversions -- is one that's entirely up to the unique personal circumstances of the taxpayer or taxpayers involved.

 

Obviously, at its broadest, it's a choice between paying the taxes now at whatever tax rate you're at now (if you do the Roth conversion now) vs. paying the taxes later at whatever you think your tax rate will be in the future (if you keep the funds in a traditional IRA and begin withdrawing them voluntarily, or wait until RMDs kick in). So one of the big questions anyone considering this should ask is: Do I think my tax rates are going to be lower or higher in the future?  If higher, then conversion now may make sense. But if lower, probably not.

 

In the case of a married couple filing jointly with two people's taxable incomes being added together, then you have to figure not only your current and future outlook, but also that of your spouse, now and in the future. There's a lot of info out on the web to read on the subject of IRA-to-Roth conversions, particularly on the websites of the major brokerages like Schwab, Fidelity, E*Trade, etc, as well as on financial education-oriented sites.

 

Generally, from what I've read, the advice seems to be that you'd only want to do a Roth conversion if you can pay any tax obligation that would come due that year out of separate, non-IRA funds. And of course, in general, you don't want to convert so much in any single year that it's going to push you into a higher overall tax bracket. But you mentioned above, you have a lot of room now between your current taxable income and the top of your current tax bracket.

 

In general, for a lot of people, I think it CAN make sense to do gradual, partial conversions year after year, keeping the amounts small enough to not push you into a higher tax bracket, and likewise small enough that paying the added tax that year isn't going to impose too much of a cost burden. If someone can manage that, then the benefit of having future investments that can grow tax-free and be withdrawn tax-free anytime for the rest of one's life can be a considerable benefit -- assuming the federal government doesn't try to change the rules somewhere in the future. 

 

PS -- Obviously, I don't know all your financial circumstances. But based on what you mentioned above, if you have a couple years now where you're at the 15% federal tax rate, but you think your upcoming pension arrival is going to push you and hubby into the 25% bracket for the long-term future, then doing some conversions now during the 15% years may well be something to consider.

 

Edited April 23, 2017 by TallGuyJohninBKK

[chubby]

On 4/23/2017 at 0:37 AM, NancyL said:

Interesting discussion on pulling funds out of traditional IRA and moving into Roth IRA.  I hadn't thought about this.  Right now, we're at relatively low income in the 15% tax bracket on Hubby's SS and private pension, and not at the upper limit on income in that bracket.  Within 2 years my private pension will "have" to start, pushing us up to the 25%.  Yeah, a good problem to have.  Would it make sense to move some funds now while we're still in a lower tax bracket?

you probably could just do what the other guy is doing if you think you will be permanently over the upper end of the bracket, just convert up to the limit of your bracket, if you want all the hassle of doing it,  not a bad idea to be 'tax diversified' betwen TIRA and RIRAs,    they always say, it partially depends on what happens to the brackets  when your time comes to take the RMDs .... which of course no one knows, hence the reason to be diversified ......er, or what john probably said

Edited April 25, 2017 by chubby
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