Should I convert my traditional IRA into a Roth?

[Tim Hoffman]

I used to have a "Real" job and contributed to my 401k as much as I could. When I quit and went into RE full time, I rolled over into a self directed IRA, NOT a Roth. (This was done to keep my income low as I continued to contribute as my kids were all going to school and that darn FAFSA.)

Now that my kids are out of school, I am considering doing the Roth conversion.  The lower Trump tax rates, expanded brackets and the bonus 20% pass thru deduction have me thinking this is probably the best time to make the conversion.

My problem / concerns are as follows:  

- I have just over $250k in my IRA (dividend paying stock) so the taxes owed would be HUGE.

- I have approx $1.2M net worth in RE and plan on keeping most of it as I retire so I do not foresee NEEDING the IRA balance to live.

- I am 52yrs old so I have some time to recapture but not that much (comparatively).

- The market is at an all time high so paying taxes now may mean if there is a correction, however slight, I am overpaying the tax

- I could pay the tax from current reserves but that would leave me almost naked on that front.  Perhaps a multi year conversion but that shortens my time to recoup etc etc etc

- I ASSUME the tax rate will only go higher from here as sooner or later there will be a changing of the guard in DC and the current Dem platform is higher taxes, especially for people like me.

- by the time I hit 70.5 and the RMD start kicking in, the balance could be close to or over $1m in the IRA meaning I could have an RMD of $75-$100k yr on top of my RE income, which, by then, will be sans the depreciation deductions, meaning HIGH TAX BILLS.

My questions are this;

- Is there a calculator that you can punch in your data and future assumptions and it gives you a recommendation or break even analysis.

- Do you bite the bullet now or spread out over 2+ years

- Do I just leave it and worry about it in 18 years or let the kids pay the tax when I die

- 1st world problems, I know, but I don't want to pay more tax than I have to and I DO want to leave as much as I can to MY charities and heirs and not the Govt.

Thanks for any suggestions or insight this great group of investors can offer.

Tim