Originally Posted by LOL!
Is it time for an update?
My apologies for the delay. I did consult with a financial planning firm. Although I probably should not advertise their name here, they are a member of the Garrett Financial Planning network of fee-only advisors, they have an excellent reputation in California and their principals have been nationally recognized as being among the best independent fee-only planners.
I made contact with one of their partners, who has an engineering background prior to his finance experience. I described my parents' situation, and asked if he would review my materials, which he kindly agreed to do. I sent him a half dozen spreadsheets that I created to illustrate various components of the ROTH conversion decision. A few days later he wrote back a note suggesting that he didn't feel that it would be worthwhile for him to pursue review of the project. His explanation was that, while he had an unanswered question or two (such as the desirability of lumping conversions in fewer years vs. spreading them out over more lower-tax years, even if they then might be subject to RMDs) overall it was clear to him that my analysis appeared to be on target overall, and was not only taking into account all the primary facts, but also was rather more detailed than the vast majority of their cases, which typically rely on output from one of the packaged software solutions (moneytree, I believe.) The adviser's explanation was that he estimated it would take 10 hours for him just to familiarize himself with my models, and since their contract rate is $240/hour, he just didn't feel that the total cost he would need to charge to review my work, do his own calculations, and present his own suggestions would be justified since my approach appeared to be similar.
Anyhow, there you have it. I am actually still trying to suggest to my parents that it might be wise to make that investment just to get the second opinion. However, I'm confident in my math and my folks are inclined now to follow my advice, after we reviewed my analysis together. They will be converting over the next 24 months to avoid RMDs; they appear to have sufficient resources to both pay for the entire conversion with non-IRA assets, as well as to fund their spending goals for nearly a decade without tapping the new ROTH assets, giving the ROTH plenty of time to make up the conversion cost with tax-free growth. Within their lifetimes, the conversion will reach "breakeven" compared to a non-conversion scenario even for them, based on very conservative actuarial assumptions. And any assets they may leave to their heirs will be significantly more valuable than if they had been inherited in a taxable IRA and/or in non-IRA assets.
I remain entirely willing to share my spreadsheets with anybody who is interested, as long as doing so is ok/possible on this forum. I do see the "attachment" link feature, but I just want to make sure that submitting this kind of material, either on the forum or view private message, is kosher.