For Roth conversions, there are a few factors to be away of:
1. You can make as many conversions as you wish from a traditional IRA to a Roth IRA. But you can also make as little meaning you can choose $0 for some years.
2. If you are under 59 1/2, each conversion starts a 5-year rule. Meaning if you make a conversion in 2024, you must wait at least 5 years to withdraw or you will get a 10% early withdrawal penalty. However, since you are over 59 1/2, the 5-year conversion rule does not apply to you and so there will be no early distribution penalty.
While this may not apply to you now, it is also worth keeping in mind that Social Security Income is taxable. For joint returns, combined income up to $44,000 makes 50% of benefits taxable while combined income of more than $44,000 make 85% of benefits taxable.
You may want to consider the benefits of opening an HSA:
1. HSA contributions are pre-tax
2. HSA distributions are not taxed when used to pay for qualified medical expenses.
3. HSA plans can be invested.
4. HSA funds can be used to pay for long-term care premiums.
You can qualify to make contributions to an HSA if:
1. You must have a High Deductible Health Plan.
2. You are not on Medicare and have no other health care coverage. But you can have an Affordable Care Act plan.
3. You are not a beneficiary on another person's tax return
Even if you no longer qualify to make contributions to an HSA, you don't have to withdraw the funds right away. You can save your qualified medical expenses receipts for as long as you wish and reimburse yourself from the HSA account when it best serves you.
[Edited 6/28/2024|12:31pm PST]
