Can I do a backdoor Roth conversion with my SEP IRA like a traditional IRA?

Would it make more sense to maybe just convert like $10k a year instead of the whole $70k at once? My income varies a lot year to year so I could maybe time it for lower income years?

Converting smaller amounts annually is often a smart approach for managing the tax impact. If your income fluctuates, timing conversions during lower-income years can be very strategic. For example, converting $10-15k in years when your business income is lower could keep you in a lower tax bracket. Additionally, you might consider looking at your projected income and tax brackets for this year. If you have room in your current tax bracket before hitting the next one, you could convert just enough to "fill up" your current bracket without spilling into the higher one.

How does this service compare to just asking my CPA? I feel like my tax guy charges me an arm and a leg every time I email him a question about this kind of stuff.

I'm kinda skeptical about AI tax tools. How does it handle complex situations? Like I have a SEP IRA but also some old 401ks from previous employers that I never rolled over. Would it account for all that?

It's much more cost-effective than paying a CPA for every question. With a CPA, like you mentioned, you're typically charged for each interaction or consultation. With this tool, I was able to ask unlimited follow-up questions without additional charges. The AI is actually very sophisticated with complex situations. In my case, it accounted for my SEP IRA, a rollover IRA from an old 401(k), and even some non-deductible contributions I had made previously. It factors in all retirement accounts that fall under the pro-rata rule calculations and explains how they work together. You can input your specific details about old 401(k)s and other accounts to get a comprehensive analysis.

Wait, how does this actually work? The IRS never calls anyone back in my experience. Is this legit?

Yeah right. No way the IRS is calling anyone back in 2 hours when they have a backlog of millions of returns. Sounds like a scam to me.

It uses a technology that continuously calls the IRS for you and holds your place in line. Once they finally answer, the system connects you with the IRS agent. That's why it works so much faster than calling yourself and sitting on hold for hours. The service is absolutely legitimate. What it doesn't do is magically create new IRS agents or phone lines - it just handles the frustrating hold time for you. The IRS has an estimated 13% answer rate on their phones, but this service helps you become part of that 13% without the endless waiting. It's the exact same as if you'd called and waited yourself, just without the hours of hold music.

Would you still need to deal with the pro-rata rule for partial conversions? Or does that only matter if you're doing the full amount at once?

The pro-rata rule applies to any conversion amount, whether partial or complete. It looks at the percentage of pre-tax versus after-tax money across all your IRA accounts (Traditional, SEP, SIMPLE). For my situation, all my SEP contributions were pre-tax, so each conversion was 100% taxable. If you have any after-tax contributions in any of your IRAs, the pro-rata rule would determine what percentage of your conversion is taxable. The rule applies to each conversion you do, regardless of size.

I used H&R Block online for my Roth conversion last year and it handled it pretty well. They have a specific section for IRA conversions that walks you through it step by step. Much better than my experience with TurboTax the previous year.

This is such an important point about Medicare premiums that I never would have thought of! I'm 45 now so Medicare feels like forever away, but you're right that decisions I make today could impact my costs in 20 years. Do you know if there are any online calculators or tools that can help estimate the long-term impact of conversion strategies on Medicare premiums? It seems like there are so many moving pieces to consider - current tax brackets, future tax rates, Medicare thresholds, inflation adjustments, etc. I'm starting to think I need to create a spreadsheet to model different conversion scenarios over the next 10-15 years to see which approach minimizes my total lifetime tax burden including these Medicare considerations.

I don't know of any comprehensive calculators that factor in Medicare premiums specifically, but you're absolutely on the right track with creating a spreadsheet model. That's probably your best bet for analyzing all these variables together. For your modeling, consider these key inputs: current and projected tax brackets, expected Medicare IRMAA thresholds (which adjust annually), your projected retirement income needs, and potential future tax law changes. You might also want to factor in state taxes if you're in a high-tax state now but planning to retire somewhere with lower taxes. One thing that might simplify your analysis - focus on keeping your MAGI below the first IRMAA threshold ($103k for 2024) in the years that will affect your Medicare premiums. So for someone who's 45 now, that would mean being mindful of conversion amounts starting around age 63-65 when those income levels will impact Medicare costs. The exact thresholds will change over time, but the general principle of avoiding large income spikes in your early-to-mid 60s could save significant money on Medicare premiums.

You're absolutely right about needing to model this out! The interactions between all these factors can be really complex. While I don't know of a specific calculator that handles Medicare premiums alongside Roth conversion strategies, you could build a pretty effective spreadsheet by combining a few different tools. For the Medicare piece, the SSA website has current IRMAA thresholds, and you could project those forward with reasonable inflation assumptions (maybe 3-4% annually). For tax brackets, you could use current rates and make assumptions about future changes. One thing that might help simplify your analysis: focus on keeping your MAGI in the years approaching Medicare eligibility (ages 63-65) below the first IRMAA threshold. That might mean doing larger conversions in your 40s and 50s, then smaller ones or even pausing conversions entirely in those critical years that will determine your initial Medicare premiums. Also consider that Medicare uses a 2-year lookback, so income at age 63 affects premiums at 65, income at 64 affects premiums at 66, etc. This creates some interesting planning opportunities if you time it right.

You're absolutely right to think about creating a comprehensive model! I've found a few tools that can help with this type of long-term analysis. NewRetirement and FidSafe both have calculators that factor in Roth conversion strategies alongside Medicare premium projections, though they require some detailed input about your current financial situation. For a DIY approach, the Medicare.gov IRMAA tables are published annually and you can use those thresholds as benchmarks in your spreadsheet. The key is to remember that Medicare uses your MAGI from 2 years prior, so you'll want to model how different conversion amounts in specific years will impact your premiums down the road. One strategy I've seen work well is front-loading conversions in your 40s and 50s when you have more flexibility with income timing, then tapering off as you approach 63-65 to keep your MAGI below the IRMAA thresholds right before Medicare kicks in. This gives you the tax-free growth benefits while minimizing the Medicare penalty later. The complexity definitely makes a strong case for consulting with a fee-only financial planner who specializes in tax-efficient retirement strategies, especially given the long-term implications we're talking about.

You're absolutely right that modeling this out is crucial! I've found that creating a multi-year spreadsheet is really helpful for these complex decisions. For Medicare premium calculations, the Social Security Administration website has the current IRMAA brackets, and you can use historical data to estimate how those thresholds might increase over time (they're typically adjusted annually for inflation). One approach I've seen work well is to create scenarios with different conversion amounts per year and calculate the total cost including: 1) Income taxes on conversions, 2) Potential bracket jumps, 3) Estimated Medicare premium increases starting at age 65, and 4) The opportunity cost of paying taxes earlier vs. later. The tricky part is estimating future tax rates and Medicare thresholds 20 years out, but even with conservative assumptions, you can usually identify whether smaller annual conversions or larger lump sums work better for your situation. The key insight is often that the "optimal" conversion amount per year is much more nuanced than just staying in your current tax bracket.

You're absolutely right about needing to model this out - there are definitely a lot of moving pieces! I don't know of any specific calculators that factor in Medicare premiums alongside conversion strategies, but you could build a solid analysis by combining a few different tools. For the tax side, you could use tax projection software or even a detailed spreadsheet that models different tax brackets over time. Then layer in the Medicare IRMAA thresholds (though remember these get adjusted for inflation each year, so you'd need to estimate future threshold increases). One approach that might simplify your analysis: focus on keeping your total income (including conversions) under key IRMAA breakpoints in the years that will matter for Medicare. For example, if you're 45 now, your income at ages 63-65 will determine your Medicare premiums at 65-67. You could plan heavier conversions in your late 40s and 50s, then lighter conversions as you approach those critical Medicare lookback years. The tax software H&R Block Premium or TurboTax Premier both have multi-year tax projection features that might help with the modeling, though you'd still need to factor in the Medicare piece separately.

You're absolutely right to think about creating a comprehensive model! The Medicare piece really does add another layer of complexity that most people don't consider until it's too late. I've seen some financial planning software that can model these scenarios, but honestly, a well-designed spreadsheet might be your best bet for customizing all the variables specific to your situation. You'll want to include current and projected tax brackets, potential changes in tax law, Medicare IRMAA thresholds (which do adjust over time), and your expected income patterns. One thing to keep in mind is that Medicare thresholds don't always keep pace with inflation the way tax brackets do, so what seems like a "safe" income level today might trigger IRMAA surcharges in 20 years. The income thresholds have remained relatively flat while healthcare costs have continued to rise. If you do build that spreadsheet, consider running scenarios where you complete most of your conversions in your 40s and 50s versus spreading them out into your 60s. You might find that front-loading the conversions, even if it means higher taxes now, could save significantly on lifetime Medicare premiums later.

You're absolutely right about needing to model this out! The Medicare premium impact can be substantial - we're talking about potentially thousands of extra dollars per year once you hit those IRMAA thresholds. I don't know of any specific calculators that factor in Medicare premiums alongside conversion strategies, but you could build a solid model using the current IRMAA brackets and assuming they'll adjust with inflation over time. The key variables to track would be: your projected income in retirement, conversion amounts by year, current and future tax brackets, and the Medicare premium surcharge brackets. One thing to keep in mind is that Medicare premium surcharges have their own "cliff" effects - you could convert just a few thousand dollars too much and trigger an extra $70+ per month in premiums for the entire year. This makes the timing and sizing of conversions even more critical as you get closer to age 65. A spreadsheet approach is definitely the way to go. You might also want to run scenarios assuming Medicare thresholds increase with inflation versus staying flat, since Congress has changed these rules before.

You're absolutely right about needing to model this out! For Medicare impact calculations, I'd recommend checking out the Medicare.gov IRMAA tables and using a compound growth calculator to project how different conversion amounts might affect your future MAGI. One approach that's worked well for me is creating a simple spreadsheet with columns for: year, conversion amount, projected tax bracket, estimated tax cost, and projected Medicare impact (starting at age 65). You can use historical IRMAA thresholds and assume they'll grow with inflation. The key insight I found is that sometimes it's worth paying slightly higher taxes now to avoid both higher future tax rates AND Medicare surcharges. For example, if you expect to be in the 24% bracket for conversions now but might hit IRMAA thresholds later, paying 24% today could be cheaper than paying 22% + Medicare surcharges in retirement. Also consider that Roth IRAs don't have required minimum distributions, so converting now gives you more control over your future income timing, which can help you manage Medicare costs more strategically.