Yep. And the other way to look at it (as you alluded to above) is that the last $50k of Roth conversion is effectively being taxed at a rate of 24% + 3.8%. Not directly, but effectively. If this couple wanted to keep Roth conversions at or under 24%, then they could only convert $50k that year.
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Yep. The income taxes generated by the last $50k of Roth conversion would be (24% x $50k Roth conversion) + (3.8% x $50k investment income) = $12,000 + $1,900 = $13,900
Since the $13,900 tax would have been avoided if the last $50k in Roth conversion had not been implemented, the marginal tax rate on that conversion is $13,900/$50,000 = 27.8%, which is what you get when you add 24% + 3.8%
AJ
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