Should you convert a traditional IRA to a Roth IRA? How do you decide?
The answer is not the same for every IRA owner. The strategy that puts the most after-tax wealth in your pocket is determined by several variables. Is your tax rate higher or lower now than it will be in retirement? How long will you delay distributions after converting? How much will you withdraw from the IRA each year? What will be the rate of return on your IRA?
The Web has a number of calculators to help you compare results. But these calculators tend to be limited. They often don’t let you change only some of the key variables, and they are limited in how they display the results.
That’s why we developed our Retirement Watch IRA Conversion Spreadsheet. This unique calculator fills the information gap for IRA conversions. It allows you to change more variables than others and shows you the results in several formats.
It properly accounts for the money you would use to pay the conversion taxes. You can set separate tax rates for the year of conversion, the years before retiring, and during retirement. You also can set different investment returns for before and during retirement. You set all these factors and more, and change them as often as you want.
The spreadsheet calculator is available for purchase and immediate download on our Web site. Learn more about the spreadsheet by visiting www.RetirementWatch.com.
January 2010. RW
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