DIY Roth Conversion Planning With NewRetirement

[@HB-yq8gy]

Our baseline plan in NR just to start out looks grim. I have been retired since 2014 at 49 y/o now 58 y/o with a $67000 pension. My wife will retire this year at 59.8 y/o We only have 4 conversion options 60,61then 73 & 74 y/o. (Estate value at longevity) $98069 (Lifetime taxes) $160488. Also, my wife is taking SS at 62 y/o due to breast cancer. Thanks, Trent you're by far the most honest no up-sell. Yes, most are extremes all they want is AUM hard to funnel the noise.

[@RetirementPlanningClub]

Thanks so much for sharing and following along! Please let me know if you have any questions.

[@adamloughran]

Also, don't forget that taxes can really kick your butt when you start taking SS and you have high RMD's. I'm thinking to get as much into ROTH over the next few years.

[@ConnieShen-l9f]

I recently converted $150K from IRA to Roth. I paid $35K from Roth to IRS. My rationale monies in IRA are tax free where monies in saving are after taxed. I am not worry about less monies in my IRA account, I can always make it back in my Roth trading account.

[@JF-zw5tj]

I can see the calculated tax savings to be realized by doing the Roth conversions however it appears the “Estate Value Increase” (EVI) might be overstated. How does the NewRetirement software calculate the EVI? Does the software factor in (by reducing) the tax payment from other accounts and the loss of return accumulated in those accounts? I could be wrong but the EVI seems a bit high.

[@jerrybell6786]

I have the same question but it doesn’t look like we’re going to get an answer.

[@investingwithpurpose5404]

Do you know why the Roth Conversion Explorer created a plan where the conversions happened for like 10 years, then took a break and then started again?

[@markp9083]

Unless I am missing something paying for the conversion out of the amount converted does not make all that much difference. Money is fungible if it comes from your checking or comes from the conversion there is no difference. It emotionally feels different but in reality its not, that money out of checking used to pay the tax for the conversion was taxed at some point maybe even at a higher rate than what your tax rate is today. Using outside funds can allow you to convert more in a given year but it does not make the conversion cheaper. Conversions only work by filling up the lowest possible brackets and then holding the roth as long as you possibly can.

[@HomeOnWheels320MKS]

Agreed!

[@gdb5843]

Agreed !! My goal is to reduce my RMD and let the Roth grows as long as possible.

[@charlesbyrneShowComments4all]

For some of my retired relatives this could be an issue. If you factor in the income amount, but not the capital gains from a taxable brokerage account. If they don't have losses on capital gains, but they use the taxable brokerage to pay taxes (capital gains are stacked on top of earned income). Then because of the IRMAA 2 year look back it could move them into the higher IRMAA bracket for the year(s) they convert. So there may be a difference in increased Medicare premiums (higher premium same service). Since it is a two year lookback it might be wise to also run a IRMAA calculator that projects future rates accurately. I don't think the taxable amount of social security from provisional income would matter since it would go up to 85% and everyone has 15% of social security not included in taxes and it would be a smaller factor in AGI. So I would explore all possibilities and consider bull and bear markets. It might be good to also draw down some additional IRA amount before the conversion right before ending tax year say in December, i.e., calc what taxes you owe then take out some IRA before or split the amount between the two tax years (dec, Jan) factoring in everything mentioned. I am not a financial advisor and everyone's situation is different and you should seek advice from professionals before making such decisions.

[@lindsaynewell6319]

Great content for people new to NR like me (playing with free version, Plus trial and likely buyer soon). Would have been really interesting to explore the 2026 suggestion of a much bigger conversion - why? what impact? how much tax?

[@onlywenilaugh6589]

IT may not be optimal for taxes coming out of the conversion, but it still could be best option to avoid other taxes later due to provisional income eh?

[@mrjb8502]

Thanks for the helpful video. Do you know if NR simply adds the total pretax balance (gross) to the total ROTH account balance (net) at the end of life to optimize the ROTH conversion strategy? Obviously, it’s more beneficial to my heirs to inherit a $100k ROTH than a $100k pre-tax IRA. Just wondering if that difference is taken into account. Thanks again.

[@markgoodsmith7229]

How does this tool stack up against the service that Craig Wear provides? Also, is your software and my data kept on my PC, or is this web based with storage on the cloud someplace?

[@investingwithpurpose5404]

Does the Roth Conversion Explorer take into account takes from Social Security and the Social Security Tax Torpedo?

[@jimpearson7743]

With the Roth conversion explorer scenarios, how smart are the tax calculations? (i.e. if you want to run 300,000 conversions for several years, will it apply the higher brackets or does it remain at your starting effective tax rate?) (and starting in 2026 does it stop applying the current tax rate structure and revert back to the rates from 10 years prior as current law calls for?)

[@JohnFisk-OHS-78]

13:10 Question: What strikes me when looking at the Annual Tax Liability Chart for the two tax strategies (no Roth conversion vs. Roth conversion) is Area Under the Curve (AUC) for the two curves, which would compare the TOTAL tax burden over that period of time (think Calculus 101 and integrating two functions over a definite interval). Does the software provide that information? Just curious. Thanks! J

[@jamesmiller2317]

Is it possible with the NewRetirement tool to model a Roth conversion and show the tax coming from the conversion (vs. after tax money to pay the income tax)?

[@HomeOnWheels320MKS]

Did you ever figure this out?

[@jamesmiller2317]

@Tim Childers At the time there was no easy way to accomplish this. It's my understanding that they are working on an update to allow more flexibility in the future.

[@RetirementPlanningClub]

Yes, you can now tell the system to pay for taxes from the conversion or not.

[@DK-et6lm]

Is the wealth tracker something you get with New Retirement or do you have to get that separately?

[@RetirementPlanningClub]

The wealth tracker is a simple spread sheet that I built. Join The Retirement Planning Club and you can access it for free: www.secureyourretirementnow.com

[@keithmcphail1152]

I like your presentation, but honestly, a lot of people cannot support paying for the Roth related taxes out of cash. They just don't have enough saved to pay the taxes and live off of the cash for any extended period of time. Sometimes, you need to reduce your net into the Roth so that you can continue to live comfortably. It's not great, but it's real.

[@RetirementPlanningClub]

Yup, I agree > kzbin.info/www/bejne/rZOulZugidF8hLM

[@gregorydufault1049]

But, you would rather pay tax on the seed and not the harvest, right!

[@jeepone61]

Where did you get the optimistic and pessimistic ROR (7.5 and 5.35) on the account to convert?

[@RetirementPlanningClub]

Here is a method I like to use to determine what percents to plug in based on asset allocation: kzbin.info/www/bejne/oYmXgqdqo7WLm5o

[@thomaslyens7981]

When you compare 150k in a traditional IRA vs 130k ROTH, unless your tax bracket is 12% or less when withdrawing, then isn’t the 130k tax free worth more?