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Roth Conversion Tax
Old 11-20-2006, 10:09 AM   #1
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Join Date: Dec 2005
Posts: 27
Roth Conversion Tax

I think maybe I found a way to use Firecalc to calculate the tax effect of my 10-year Roth conversion program at the top of the 15% tax bracket:

On the first page ("How Much Will You Spend?"), I entered the target amount of my conversion tax payments as an "increase" of my withdrawal starting this year (2006). I check the inflation-adjusted checkbox in order to keep up with the future 15% bracket creep.

Then I enter the same number (the target amount of my conversion tax payments) as a "decrease" in my withddrawal starting in the year of 2016 (10 years later). And I ask Firecalc for my results in terms of "how much (I) spend each year."

Question: should I check the inflation-adjusted checkbox for this "decrease?" It makes a significant difference in the results if this "increase" and "decrease aren't both inflation-adjusted (or not). So should I always keep this withdrawal "increase" and "decrease" the same in this regard, that is, they both should be inflation-adjusted or both not be inflation-adjusted? This is an important distinction, I think.

Does the above method properly use Firecalc to simulate the effect of the 10 years of tax payments caused by my proposed 10-year Roth conversion plan? Am I making any mistakes here?

I really appreciate any comments and suggestions on how to use Firecalc as accurately as possible for the purpose as set forth above. Thanks a lot, everyone, for all your help!

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Re: Roth Conversion Tax
Old 03-31-2007, 08:07 AM   #2
Full time employment: Posting here.
Join Date: Jan 2007
Posts: 686
Re: Roth Conversion Tax

Did you ever figure this one out? I'd think your scenario would calculate the taxes - but how do you indicate that those withdrawal dollars are then in a Roth account (not being spent) and generating dollars themselves?

But I'm just learning FireCalc myself.
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