I-ORP obamacare cliff calculation - Roth conversions

[woodguy00]

Last week I started corresponding with the developer of ORP to see if the ORP program could model Roth conversions if someone wanted to stay under the O-MAGI limit. After working through a couple of bugs, James released an update today that includes a button on the input form that works the optimizer while one stays under the Obamacare cliff.

My results show a reduction in Roth conversions to keep OMAGI below $62K until hitting age 65 when medicare kicks in. By then I would use up after tax amounts and use the remaining tIRA funds from 65-70 to live on. Without the button checked, the model shows Roth conversions to the top of the 15% bracket until fully utilized.

The interesting result was that in my case the total ending assets are almost identical if you factor in the additional savings in receiving the subsidies. As such, I'm relatively indifferent as to managing to below $62K or doing Roth to the top of the 15% bracket. Based on this, I'm inclined to make the larger conversions to eliminate future higher tax as an individual in event either my wife or I assume room temperature at an early age.

My appreciation to James for adding the feature to ORP - I don't think I've seen anything similar elsewhere.

 

[skibum]

Thanks, I will check it out. Counting down to FIRE in less than a year and running a lot of retirement models and health care estimates. With a family of 4, my rough estimate for the additional conversion opportunity from the ACA MAGI limit to top of the 15% bracket is $13k -> Roth, generating $2k in taxes, and foregoing $9k in subsidies. I understand the subsidies can vary significantly by state (CA here), and taxable/MAGI differences are influenced by filing status, family size, and deductions.

I know alot of folks are interested in modeling the ACA cliff, and I-ORP is an awesome tool. Kudos for including this feature I look forward to checking it out. Interested to see if the various factors can be modeled accurately over time.

 

[adrift]

James released an update today that includes a button on the input form that works the optimizer while one stays under the Obamacare cliff.

Before you read too much into an extra button, you should look at this post:

http://www.early-retirement.org/forums/f28/do-you-use-i-orp-68144-3.html#post1449169

where the developer of i-orp says he only considers the tax code in a crude way when he gives tax advice.

 

[woodguy00]

No tool is perfect. Each calculator , plus my own spreadsheets, have flaws and/or limitations. I personally like the guidance provided by the ORP withdrawal strategy charts and find it helpful. YMMV.