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Roth Rollover Calculation Software - After Retirement
Old 12-02-2013, 03:24 PM   #1
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Roth Rollover Calculation Software - After Retirement


New member and lurker here. 56 years old. Could retire now but we think we'll wait for 4-6 years, so we build a bigger portfolio.

Since our portfolio will be more than we need, we plan to leave money to our kids. We thought it would be considerate to roll the IRA and 401(K) money into Roth IRA's, so the taxes are already paid and the money can grow tax free and be distributed over our kids lifetimes.

We'd like to do the rollovers over a period of years, to limit the tax burden.

Has anyone used software to compare rollover schedules? I'd really like to model different ones and see what schedule gives us the maximum ending portfolio.

Thanks for your help!!
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Old 12-02-2013, 09:37 PM   #2
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I don't have a software program for you, I have just guestimated mine based on tax brackets.
Wanted to point out to you that a heir has to make MRD distributions from a Roth as well as a TIRA, but at least the Roth is tax free if it has been open long enough. If someone inherits a traditional IRA and has to make those distrrbutions on top of their salaries it can really mess up their tax bracket.
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Old 12-03-2013, 08:15 AM   #3
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iORP includes a 401k to Roth conversion recommendation in their program. See link below:

Retirement Calculator - Parameter Form

ESPlanner has a feature in it but I'm not sure if it is in the free basic link below:

Home | ESPlannerBasic

I use iORP as a start but I look at my tax planning software to make use of various tax brackets. One thing to remember is that when one person dies the survivng spouse is now taxed at the higher singles rate.
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Old 12-03-2013, 08:21 AM   #4
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Although the basic question is still ....... the tax rate you pay to convert now vs the tax rate you would pay on the TIRA RMDs............this question is complicated since you need to assume how long you would be paying the TIRA RMDs and at what rate and also the rate at which your heirs would be paying . You also need to see if IRMMA comes into play if you are converting after starting Medicare (which is a bit in the future for you).
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Old 12-03-2013, 08:32 AM   #5
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I recently read the book "The Roth Revolution" by James Lange. It covers doing Roth conversions for tax purposes in a lot of detail. The kindle version of the book is currently free for Amazon Prime members to borrow.
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Old 12-07-2013, 06:31 PM   #6
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Originally Posted by ImThinkin2019 View Post
Has anyone used software to compare rollover schedules? I'd really like to model different ones and see what schedule gives us the maximum ending portfolio.
I have an Excel model I created to analyze the Roth conversion issue and compare alternative conversion plans. I'm currently working on an update for 2014 which will be out in a few weeks, but the current version is available via this thread at Bogleheads: Retiree Roth Conversion Decision Model

A few of its features:
Calculate yearly results, including income, expenses, taxes, inheritances, and asset sales for your major portfolio accounts for the time period you select, from 1 to 40 years.

Model future common events, like death of a spouse, receiving an inheritance, selling a home, buying an RV, etc., or experiencing a large tax rate increase!

Show how conversions will impact your marginal taxes each year, allowing you to adjust conversion amounts to test for the best tax outcome.

Provide an accurate Federal tax calculation, including determining taxable Social Security benefits, for most taxpayers using simplified input factors.

We don't have any heirs but I consider that a major excellent reason for doing Roth conversions. What a great gift to leave one's children!

Retired At 50
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Old 12-07-2013, 10:56 PM   #7
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I have used Esplanner for deciding the schedule of my Roth conversions. Esplanner has the advantage that it knows about all your other assets, SS benefits, the RMDs, state and federal tax calculations, relocation plans, etc. all of which have some impact on the Roth conversion decision. Esplanner's goal is not to maximize your portfolio, although you can use it that way, but to maximize your sustainable level of consumption. That's a more appropriate goal in my opinion as well.

The disadvantage is that you have to work Esplanner a bit to get it to handle a Roth conversion. It's a two-step process, not a single button push. The folks at Esplanner will show you how to do it.

Roth questions are tax questions for which you have to have all the inputs that I mentioned above in order to compare scenarios to see which gives the best outcome. As far as I know only Esplanner provides all the calculations necessary.
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