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4. Learning the Roth Conversion Simulator: Part 1: Assumptions

The Roth Conversion Simulator is one of FP Alpha’s most powerful tools. This first of two videos covers the assumptions page, the inputs that drive the entire simulation. Learn how to set life expectancy, supplemental withdrawals, the TCJA sunset toggle, and the heir tax rate correctly before running any scenarios.

 

Duration: ~3 minutes  |  Presented by: Josh Schultz (Director of Implementation)

Step-by-Step Instructions

  1. From the client dashboard, navigate to Simulators and select Roth Conversion Simulator.
  2. Review the pre-populated assumptions — FP Alpha fills in data from the client’s uploaded tax return and profile. Everything is editable.


Key Settings to Review Before Continuing

Setting

What It Does

Best Practice

Life Expectancy

Determines how long the simulation runs. System default is age 99.

Update to an age appropriate for the client. This significantly affects the results — a shorter expectancy means less time for Roth growth.

Supplemental Withdrawals

Amount the client needs each year from these accounts to cover expenses beyond RMDs.

Leave at zero if RMDs alone cover expenses. If the client needs additional income, enter the annual amount here.

TCJA Sunset Toggle

When ON: tax rates revert to pre-TCJA levels in 2026. When OFF: current rates continue indefinitely.

Leave ON by default (this is what’s scheduled to happen). Turn OFF to model a scenario where current rates are extended.

Heir Tax Rate

The effective tax rate applied when accounts pass to heirs at death.

This is an effective rate, not marginal. Typically set between 20–28%. Default is the highest bracket — adjust based on the heir’s likely situation.


Next step

➡ Watch to Video 5: Learning the Roth Conversion Simulator. Part 2: Scenarios & Results