Sample Report: Roth Conversion Simulator

It compares a ‘with conversion’ scenario against a ‘without conversion’ baseline across the client’s full projected lifetime, from current age to life expectancy — showing the effect on portfolio balance, total taxes paid, value to heirs, and annual marginal tax rates.

This sample report for Henry D. & Mary Price models a 5-year conversion plan starting at age 40, converting $56,150 per year for a total of $280,750. Three alternative scenarios are also compared on page 11.

[DOWNLOAD SAMPLE ROTH CONVERSION SIMULATOR REPORT PDF]

12-page report for Henry D. & Mary Price — includes plan summary, assumptions, year-by-year balance tables (ages 40–92), conversion details, value to heir, marginal tax rate progression, and three-scenario comparison

Report Type: Roth Conversion Simulator | Pages: 12 | Plan Duration: 5 Years

5-Year Plan — Headline Results

The 5-year plan converts $56,150 per year starting at age 40, paying conversion taxes from an alternate account rather than withholding from the conversion amount itself. The simulation runs from age 40 to age 92 (life expectancy), tracking both the ‘with conversion’ and ‘without conversion’ paths side by side.

Total Converted	Total Tax (With Conversion)	Total Tax (Without Conversion)	Tax Savings
$280,750	$945,571	$2,234,321	$1,288,750

Tax Breakdown (With Conversion)

Client & Heir Benefit

Taxes for conversions: $66,257

Taxes for distributions/RMDs: $879,314

Total taxes paid: $945,571

Client benefit: $1,979,520

Savings to heir: $1,248,436

Key insight: Paying only $66,257 in conversion taxes now eliminates $1,288,750 in future taxes — a 19.4x return on the tax cost of converting. The primary savings come from reducing RMDs and distributions later in life, which are taxed at 37% (heirs’ rate) without conversion and at lower rates with Roth.

Model Assumptions (Page 2)

Every output in the simulator flows from the assumptions entered on page 2. Understanding these inputs is essential for replicating or adjusting the model with a client’s actual figures.

IRA & Investment Inputs

Income & Household

Beginning Traditional IRA Balance: $490,000

Beginning Roth IRA Balance: $90,000

Investment Rate of Return: 7%

Supplemental Withdrawal After Retirement: $0

Filing Status: Married Filing Jointly

Current Age: 40 years

Retirement Age: 67 years

Life Expectancy: 92 years

Pre-retirement Income: $150,000

Income Growth Rate (pre-retirement): 3.5%

Retirement Taxable Income: $110,000

Income Growth Rate (retirement): 1.5%

Pay conversion taxes from alternate account: Yes

Heirs’ marginal rate at death: 37%

Assumptions to review with every client: The 7% return assumption and the 37% heirs’ marginal rate are the most sensitive inputs. A lower return reduces the compounding benefit of Roth. A lower heirs’ rate reduces the heir savings figure. Run the simulator with your client’s actual expected return and their children’s likely tax bracket before presenting the output.

What the Report Shows: Section by Section

Page 1: Plan Summary and Portfolio Charts

The opening page displays the plan parameters (conversion amount, years, kick-off age) alongside the headline outcomes (total conversion, total taxes with/without), followed by two line charts: the Net Portfolio Balance chart (showing the ‘with conversion’ line pulling ahead of the ‘without’ line over time), and the Taxes Paid chart (showing annual tax payments diverging from roughly age 75 onward as RMDs accelerate the without-conversion path).

Conversation tip: The Net Portfolio Balance chart is the most powerful client-facing visual. The two lines start virtually identical and gradually diverge — the conversion line consistently higher from roughly age 65 onward. Point to the gap at age 92 ($16.4M vs $14.5M) as the lifetime payoff from a $280,750 conversion decision made at age 40.

Pages 3–5: Year-by-Year Balance Tables (Ages 40–92)

These three pages show the end-of-year balance for five accounts across all 53 years of the projection, side by side for the with-conversion and without-conversion scenarios. The five columns are: Net Portfolio Balance, Traditional IRA Balance, Roth IRA, Hypothetical Taxable Account, and Withdrawals.

Age	Year	Net Portfolio (Conv.)	Net Portfolio (No Conv.)	Roth IRA (Conv.)	Trad IRA (Conv.)	Trad IRA (No Conv.)
40	2026	$505,384	$505,254	$156,381	$464,220	$524,300
44	2030	$652,378	$662,285	$471,737	$341,743	$687,250
50	2036	$984,021	$973,284	$707,950	$512,864	$1,031,377
67	2053	$3,162,196	$3,139,581	$2,236,283	$1,620,043	$3,257,931
75	2061	$5,384,708	$5,282,431	$3,842,351	$2,677,787	$5,385,068
80	2066	$7,541,177	$6,845,574	$5,389,095	$3,020,130	$6,073,526
92	2078	$16,448,109	$14,468,590	$12,137,275	$3,043,264	$6,120,049

Key observation: The Traditional IRA balance in the without-conversion scenario grows to $6.12M by age 92, generating enormous RMDs that are taxed as ordinary income. The with-conversion scenario holds the Traditional IRA to $3.04M at age 92 while growing the Roth to $12.14M — which produces no RMDs and is tax-free to heirs.

Pages 6–8: Year-by-Year Conversion Details (Ages 40–92)

These pages show the conversion amount, taxes paid, RMDs, income amount, and Medicare premiums for each year of the simulation. Key patterns to note:

Conversions occur only in years 2026–2030 (ages 40–44) at $56,150 per year. Taxes paid on conversions: $12,353 in year 1, then $13,476 per year for years 2–5.
RMDs begin at age 75 (2061) in the without-conversion scenario and grow from $105,749 to $288,297 by age 92.
With conversion, RMDs are smaller because the Traditional IRA balance is reduced — from $212,664 to $579,770 in the same range.
Medicare surcharges (IRMAA) begin appearing from age 65 (2051) and increase over time, reaching $6,355 per year by age 92 in both scenarios.

Pages 9–10: Value to Heir and Marginal Tax Rate (Ages 40–92)

This section shows the after-tax value that heirs would receive if the client died at each age, and the marginal tax rate at which that value would be taxed. The heirs’ rate assumption (37%) drives the without-conversion figures; with conversion, a higher proportion of assets are in the Roth IRA and are tax-free to heirs.

Age	Year	Value to Heir (Conv.)	Value to Heir (No Conv.)	Marginal Rate (Conv.)	Marginal Rate (No Conv.)
40	2026	$435,621	$426,609	22%	22%
50	2036	$908,975	$839,204	24%	24%
67	2053	$2,871,284	$2,650,892	22%	22%
75	2061	$4,947,148	$4,582,372	24%	24%
80	2066	$7,034,259	$6,572,143	24%	32%
88	2074	$12,340,860	$11,416,038	24%	35%
92	2078	$16,260,417	$15,011,981	32%	35%

Key observation: The marginal tax rate diverges between the two scenarios from age 79 onward. Without conversion, heirs inherit at 32–35% marginal rates as the large Traditional IRA generates massive RMDs. With conversion, the smaller Traditional IRA keeps the marginal rate lower. By age 92, the with-conversion scenario leaves $16.26M at 32% vs $15.01M at 35% — a $1.25M heir benefit.

Three-Scenario Comparison (Page 11)

Page 11 is the most decision-relevant page of the report. It compares three different conversion strategies side by side, allowing advisors to show clients the trade-offs between speed, tax cost, and long-term benefit.

Scenario	Total Converted	Client Benefit	Savings to Heir	Total Taxes Paid
Optimised Scenario (Client Max Benefit) 16 years · $40,000/yr · kick-off age 40	$640,000	$2,707,269	$1,629,603	$427,771
7-Year Plan (Minimum Taxes) 3 years · $169,808/yr · kick-off age 40	$509,425	$2,851,708	$1,692,791	$121,674
5-Year Plan (This Report) 5 years · $56,150/yr · kick-off age 40	$280,750	$1,979,520	$1,248,436	$945,571

Reading the Scenario Comparison

The 7-Year / Minimum Taxes scenario is the most striking outcome: by converting $509,425 over just 3 years at an accelerated rate (~$170K/year), the client pays only $121,674 in total taxes across a lifetime — versus $945,571 in the 5-year plan. This is a 87% reduction in total taxes paid while delivering a $2.85M client benefit and $1.69M heir benefit. The trade-off is cash flow: at ~$170K/year, this requires the client to have sufficient liquid assets to pay conversion taxes from an alternate account for three consecutive years.

The Optimised Scenario (Client Max Benefit) spreads $640,000 over 16 years at ~$40K/year — a much smaller annual tax hit. It delivers the highest client benefit ($2.71M) but costs $427,771 in total taxes — more than the 7-year plan.

The 5-Year Plan (this report) converts the least ($280,750) and pays the most in total taxes ($945,571). This suggests it may not be the optimal strategy for this client, and the advisor should present the 7-year minimum-tax scenario for comparison.

How to Use This Report in Client Meetings

1	Start with page 1. Show the two headline numbers: $945,571 total taxes with conversion vs $2,234,321 without. Ask: "Would you like to pay $945K or $2.2M in taxes over your lifetime?" The answer is obvious — but then you show them the cost to get there.
2	Show the conversion cost: $66,257 in taxes on the conversions themselves. This is the investment — $66K today eliminates $1.29M in future taxes. A 19x return.
3	Walk through the Net Portfolio Balance chart. Point to the two lines diverging in the 60s. Explain: "The conversion line pulls ahead because the Roth grows tax-free and has no RMDs — every dollar keeps compounding."
4	Show page 11 — the scenario comparison. This is where the conversation gets interesting. Present the 7-year minimum-tax scenario and ask: "If we could eliminate most of the tax cost by converting faster, would that be worth it?"
5	Discuss the pro rata rule if the client has a large Traditional IRA (as in this case). A $490K starting Traditional IRA means backdoor Roth conversions will be taxable proportionally. Roll-in strategy should be discussed before executing.
6	Address the tax-payment method. The model assumes taxes are paid from an alternate account, not withheld from the conversion. This is the correct approach — withholding from the conversion reduces the amount converted and partially defeats the purpose.
7	Review the assumptions together. Ask: "Does 7% return feel right for your portfolio? Are your heirs likely to be in the 37% bracket when they inherit?" Adjust assumptions and re-run if needed before presenting a final recommendation.

Key Concepts Referenced in This Report

Term	Definition
Roth Conversion	Moving money from a pre-tax Traditional IRA to a Roth IRA, triggering ordinary income tax on the amount converted in that year. Future growth and withdrawals from the Roth are tax-free.
RMD (Required Minimum Distribution)	Mandatory annual withdrawals from Traditional IRAs starting at age 73 (age 75 from 2033 under SECURE 2.0). RMDs are taxed as ordinary income. Roth IRAs have no RMDs during the owner’s lifetime.
Client Benefit	The accumulated after-tax advantage of the with-conversion scenario over the without-conversion baseline, measured at life expectancy.
Savings to Heir	The additional after-tax inheritance heirs receive because Roth assets inherited under current rules can grow tax-free for up to 10 years (10-year rule for non-spouse beneficiaries).
Net Portfolio Balance	The total value of all accounts (Traditional IRA + Roth IRA + Hypothetical Taxable Account) minus the present value of taxes expected on distributions.
Pro Rata Rule	If a taxpayer has pre-tax IRA balances, backdoor Roth conversions are taxed proportionally based on the ratio of pre-tax to total IRA assets. A $490K Traditional IRA makes most of any new conversion taxable.
Pay taxes from alternate account	The recommended approach: use non-IRA funds (savings, brokerage) to pay the conversion tax bill rather than withholding from the IRA itself. Withholding reduces the amount converted and eliminates money from the tax-advantaged system.
Marginal Tax Rate	The rate at which the next dollar of income is taxed. The report tracks how the marginal rate changes year by year based on income from RMDs, Social Security, and other sources.
IRMAA	Income-Related Monthly Adjustment Amount: surcharges added to Medicare Part B and Part D premiums when MAGI exceeds certain thresholds. Large Traditional IRA distributions can trigger IRMAA even in retirement.

Ready to generate a Tax Planning Snapshot for your client?

Upload the client’s tax return under Data & Documents and FP Alpha will generate the Snapshot automatically.

[LOG IN TO FP ALPHA]

Disclaimer: Information provided is for educational purposes. Your advisor does not provide tax, legal, or accounting advice. In considering this material, you should discuss your individual circumstances with professionals in those areas before making any decisions.