This is an old post, but very pertinent to me since Roth conversions are my main reason to buy a canned tax planning software.The Roth Conversion what if allows you to test various conversion options over a certain number of years starting at a particular year or by selecting conversions up to the top of each tax bracket over a selected number of years. For each combination of options it shows you the change in your net worth versus without the conversion and a breakeven chart of these net worths.To eor and beernutz, since you've been using it...
Have you used the Roth conversion function and how do you feel it handles that part of it?
That is a little deceiving as the net worth shown without Roth conversions is pretax and the net worth with them is after tax. So for example if you have $1,000,000 in a tax deferred IRA, it is really not worth $1,000,000 because you are going to have to pay tax, possibly a lot of it, when you withdraw it. This would especially be the case if a RMD is received by a single filer because a spouse has passed as it is received as ordinary income whereas a post-conversion Roth IRA has already had its taxes paid.
I bring this up because the net worth breakevens shown for doing Roth conversions for me shown by Pralana were far in the future when I was in my mid 80s but they don't take into account that Roth money is worth more than tax deferred money.
Has the above mentioned issue been resolved (or was it ever really present) ? If present, it is a glaring error
Statistics: Posted by EricGold — Mon May 06, 2024 8:37 am — Replies 33 — Views 10107