A common rule of thumb with Roth conversions is to convert just enough each year to “fill up” your current tax bracket without spilling into a higher one. This is better than doing nothing, but is rarely optimal. This strategy can leave a a lot of money on the table–potentially millions of $’s over a lifetime.
The optimal conversion amount is highly dependent on factors like the rate of return, the size of your IRA, and the amount of savings you have in taxable accounts to pay for conversion taxes. None of these factors are considered in the fill-up your bracket approach.
The complexities of these factors along with interest rates, inflation, RMDs, IRMAA, NIIT, Social Security payments, Federal taxes and State taxes make it impossible to have a one-size-fits-all approach. The Roth IRA Conversion Optimizer takes all of those factors into account and will clearly show the impact to your net worth over time.