401k to Roth IRA

Converting would certainly widen your range of investment options. But, if you've been happy with the performance of the investments within the 401k, more options might not appeal to you. It could actually make you crazy.

Probably not. Even though you can split the amount over 2 years, that's still $175K/yr (2011 and 2012).

Your exemptions and standard deduction add to $18,700, so you have about $100K taxable (for now I'm ignoring mortgage or property tax, etc, to keep numbers simple.)

In 2010 MFJ is taxed at 25% until $137,300. Next $70K or so is taxed at

28%, then 33%.

I am of the opinion that the conversion is oversold, great for a select few. The 80 yr old whose IRA I convert just enough each year to top off her 15% bracket. The 50 yr old disable gal whose IRA I convert just to match her std deduction/exemption. It's a rare case where a wholesale conversion as you consider makes sense.

I recommend ignoring the 2011/12 option. This year I suggest rolling the

401(k) into a traditional IRA, taking a breath, and projecting your taxable income. See it's pretty clear to follow. Then convert enough to just 'top off' your 25% bracket. In 2010, that means a taxable income of $137,300. If you really want to get ahead on conversions and do the 11/12 deal as well, do it in two separate transactions. You still want to claim enough in 2010s return to take advantage. When your wife's income goes away, you'll be able to increase the conversion amount if you wish.

I understand "rates are going up", but do you think that the first round will impact couples with $100K? The bar is set to start increases at about $250K. It will take some time befoe you'd have to worry about this. Why pay 33% now when you are at 25%? Joe