Tax Planning
TAX PLANNING
Roth Conversion Ladder
Model multi-year conversions to fill lower tax brackets now and reduce future RMD exposure.
Parameters
Traditional IRA balance$1.20M
Annual conversion amount$75K
Years to convert5 yrs
Retirement duration30 yrs
Expected growth rate7.0%
Total tax cost
$83K
Projected savings
$269K
Break-even
10 yrs
Rate arbitrage
+2% advantage
Year-by-year projection
| Year | Conversion | Tax cost | tIRA balance | Roth balance |
|---|---|---|---|---|
| 1 | $75K | $17K | $1.20M | $80K |
| 2 | $75K | $17K | $1.21M | $166K |
| 3 | $75K | $17K | $1.21M | $258K |
| 4 | $75K | $17K | $1.22M | $356K |
| 5 | $75K | $17K | $1.22M | $461K |
tIRA vs Roth balance over conversion period
Yr 1
$1.28M
Yr 2
$1.37M
Yr 3
$1.47M
Yr 4
$1.57M
Yr 5
$1.68M
tIRA
Roth
Roth conversions increase ordinary income for the year. Verify IRMAA thresholds, ACA subsidy cliffs, and state tax implications. AI-assisted — verify with CPA.