No. of Recommendations: 2
(US-specific topic)
I'm currently in the sweet spot where it makes sense for me
to do Roth conversions over the next 10 years, to minimize
eventual taxes when Required Minimum Distributions (RMDs)
take effect.
As part of the process, I'm moving BRK.B shares over to my
Roth account, because I think in any given year (once
my RMDs are in force), those share prices are likely to
hover around their central value -- not swing too wildly
in either direction, but keep up with inflation + #%.
This is important because my Roth account serves two purposes:
1) A legacy to my heirs with minimal tax consequences; 2) An
emergency "bucket" if I need to make a large purchase/investment
and avoid severe tax consequences.
With the recent run-up of Berkshire ($437/BRK.B as of yesterday),
I decided to sell ### shares within the Trad IRA account, the
equivalent cash amount of what I intend to convert later this
year.
My plan:
If the price of Berkshire drops a lot, move the cash equivalent
of BRK.B shares to the Roth account.
If the price of Berkshire continues to rise through the end of
the year, move the cash to the Roth -- deferring the decision
of what to do with the money until later.
In either case, I will proceed with the planned conversion
dollar amount based on my tax situation. It could be argued
that if BRK.B continues to rise through 2024 then I've missed
out on some gains, but since the dollar amount of the conversion
is fixed (in my case), I thought this would be a reasonable
trade-off of opportunity and risk.
-Rubic
No. of Recommendations: 3
That's mental accounting. ("a cognitive bias that states the tendency to treat one's money differently based on factors such as its intended use or its source.")
Don't overthink it. "Money has no smell."
Once you have the cash, it does not matter where it came from. Doesn't matter if it came from selling BRK or from selling SPY.
No. of Recommendations: 1
<< Once you have the cash, it does not matter where it came from. >>
A slight difference: There's an optimal tax value of $X that I want to
convert from a Trad IRA to a Roth IRA in 2024. By selling BRK.B shares of
$X within the Trad IRA account, I defer the decision of whether to transfer
cash, or (presumably) a potentially higher value of Berkshire shares priced
below yesterday's quotation at the end of this year.
-Rubic
