grayparrot
Dryer sheet wannabe
- Joined
- Dec 30, 2011
- Messages
- 22
I have been developing custom spreadsheets to try to determine rules of thumb regarding whether it is advisable to do a ROTH conversion, given certain factors.
I am targeting the same kind of conservative "rule of thumb" as is used for withdrawal rates, i.e., "it generally makes sense to assume conservative starting withdrawal rates of 3.5%..."
The factors for a ROTH conversion rule of thumb would be based on a conservative return assumption as a base...let's say 4% real return. The other factors would include number of years of income available in non-IRA assets, in ADDITION to fund necessary for a ROTH conversion, and the expected tax rates in the years before a ROTH breakeven value with a traditional IRA/tax payment fund.
My goal is specifically to help my parents decide on whether to do a ROTH conversion. More generally, I would like to be able to arrive at a generalized rule that says "If you have X years of projected spending available in non-IRA funds, and in addition you have the necessary conversion funds outside of the IRA as well, and your tax rate will not be more than 3% lower than it is now, and projected portfolio growth is 4% after inflation, then you should convert."
How have others made the determination about whether to convert...your own spreadsheets, or prefab calculators? What growth rates and other assumptions have you made?
I'd be very interested in exchanging ideas with others involved in similar analysis.
I am targeting the same kind of conservative "rule of thumb" as is used for withdrawal rates, i.e., "it generally makes sense to assume conservative starting withdrawal rates of 3.5%..."
The factors for a ROTH conversion rule of thumb would be based on a conservative return assumption as a base...let's say 4% real return. The other factors would include number of years of income available in non-IRA assets, in ADDITION to fund necessary for a ROTH conversion, and the expected tax rates in the years before a ROTH breakeven value with a traditional IRA/tax payment fund.
My goal is specifically to help my parents decide on whether to do a ROTH conversion. More generally, I would like to be able to arrive at a generalized rule that says "If you have X years of projected spending available in non-IRA funds, and in addition you have the necessary conversion funds outside of the IRA as well, and your tax rate will not be more than 3% lower than it is now, and projected portfolio growth is 4% after inflation, then you should convert."
How have others made the determination about whether to convert...your own spreadsheets, or prefab calculators? What growth rates and other assumptions have you made?
I'd be very interested in exchanging ideas with others involved in similar analysis.