77 yo here. With the extremely high probablity of tax rates increasing the remainder of my life should I consider withdrawing more than the minimum required amount from my IRAs and investing them in the appropriate categories for those in my situation?
'rates going up' won't necessarily hit everyone. I doubt those in the
10-15% bracket have a high risk for their tax rate to go up soon. The
2014 rates are already announced. On Jan 2, 2014, why not take your RMD,
and then convert a chunk to Roth? By tax time 2015, you'll know if there
are new higher rates that will impact you, or not. If not, and the
investments converted have gone up, look at the tax bill compared to the
current value. If the investment dropped, just characterize.
RMDs cannot be rolled over to another traditional IRA or _converted_
to Roth IRAs, can they? If the OP has earned income (possibly not
at age 77), a Roth _contribution_ could be done, but not a rollover
of the RMD. Any amounts distributed in _excess_ of the RMD
could be converted to Roth IRA but not the RMD.
Why do you think that? I agree there's a substantial risk of tax
increases for some taxpayers, but it's not typical for retirees to face
high tax rates. My first assumption would be the opposite, that there's
a higher probability of paying too-high a rate if you accelerate IRA
distributions. You could increase your adjusted gross income or taxable
income to the point where you have an unusually high rates because of a
higher tax bracket, plus phase-outs, lost credits and deductions, etc.
And once out of the IRA, depending on the types of investments you own,
you might face higher taxes on the investment income when you reinvest
the proceeds using a taxable account (if not from dividends & interest,
then from capital gains in future sales).
Of course...it's entirely specific to each individual which is why it's
essential to run a tax projection with real numbers. If the higher IRA
distributions won't be taxed at all currently, there's more of an
argument for doing it.
This was similar to what I tried to suggest. You are right, the question
can't be answered without more details.
I circle back to partial conversions only for the fact that (a) they are
reversible, and (b) they can top off the bracket each year and help
avoid RMD creep.