Should I switch from tax-free to tax for retirement?

[Daphne7]

Hello,

So I have a decent bit of money in my 401k saved up due to working with my current employer. However, I will be attending medical school in the fall. Considering that it is more than likely that I will be in a higher tax bracket in the future as an attending, and considering that wages YoY generally tend to increase, I was wondering if there was a purpose in me converting from a 401k(tax-free) to a roth ira. Would that make sense at all? What would be the pros and cons of each? Wanted to make sure I had every angle covered. Thanks for the help.

Best,
Daphne

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[DoctwoB]

Depends on if you can handle the tax bill from the conversion. Its a great way to pay a lower tax rate on that money then you will in retirement, but you need to cash on hand to pay the tax bill when you file.

Roth Conversion: A Super Smart Move for Grad School

These low-income years of graduate school can be used to do some tax-smart maneuvers that can save you money down the road.

www.earnest.com

 

[TMP-SMX]

Wait until the tax year after you last worked to convert some. Do a calculation to avoid having to pay any tax and stay under the standard deduction.

 

[Daphne7]

I see. I think I will convert next year then. Thank you both so much for your helps!