Model to back into Roth conversion assumptions
Given the market dip as well as an expected dip in our taxable income in 2020, we are considering a Roth conversion. I ran a model on Fidelity’s website that indicated we are better off not converting, but obviously the results are highly dependent on assumptions re current and future tax rates.
Instead of having a model tell me if a conversion is financially beneficial under certain assumptions, I’d like to find a model that tells me how much our future tax rates would have to be, and what assumptions we’d have to make about future rates of return, in order to make a conversion beneficial. Then I can evaluate the likelihood of this ever occurring.
Every time we’ve ever evaluated Roth conversions in the past vis our CPA, I-Orp, or the Fidelity tool, the answer for us has always been not to do it. However, I’m thinking the current environment and likely future appreciation of the investments may make 2020 a unique opportunity.
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