Agreed, I'm just saying that calculating the marginal rates (and how conversions affect them) isn't rudimentary. If the calculations were easy we might not be having all these discussions about the pros and cons of different calculators.If you don't know the marginal rates, the entire exercise seems pretty useless. How else will you determine if the conversion is worth doing?Actually calculating the marginal rate isn't rudimentary though. My understanding is that a big part of the justification for the full or nearly-full conversions is the 0% vs. 85% SS taxation, plus an IRMAA decrease of multiple tiers, both over multiple decades. So there's no question that a spike in marginal rates for some number of years is almost always necessary to get there.One rudimentary check that can be done is to look at the marginal tax rates (including all tax impacts, such as IRMAA, SS taxation, Loss of ACA credits, etc) across the entire time horizon. In most scenarios, the optimal solution will have a flat marginal rate over the entire period. It is tough to achieve, but that is the goal. If the recommendation for large conversions results in a spike in the marginal rates during those years, it is unlikely to be a reasonably good overall plan.
Statistics: Posted by tibbitts — Tue Jun 25, 2024 8:30 am — Replies 74 — Views 5078