Instructions
To find the optimal Roth conversion for the active scenario, click the Run Roth Optimization button on the Control Panel. This will test every Income Target value from 0 to $1M at $10k intervals for the six interest rates shown in the column headers on the Roth Conversion Optimizer worksheet for the selected Scenario. It will display the results in both a table and chart. The column headers can be modified if different rates of return are desired. The table assumes all the returns (Savings, IRA, & Roth IRA) are the same. Once the optimal Income Target value is identified, the user can enter and load that value back in the active scenario and view it in the Main worksheet.
The Goal: Maximizing Your Future Wealth
The Tool has one clear objective: to find the strategy that maximizes your total after-tax net worth by the final year of your planning horizon. It achieves this by pairing the core principles of tax smoothing with a rigorous, deterministic analysis to pinpoint the exact Income Target that produces the best mathematical result.
The Tool does not rely on guesswork, subjective preferences, or complex balancing acts. Instead, it runs a pure, mathematical analysis based entirely on the numbers and rules you input for your scenario. The income targets that leave you with the highest projected wealth at the end of your plan are highlighted as the top-performing results
See below white paper for more information on tax smoothing and how it is applied in the Optimizer.
How the Optimization Process Works
Rather than just comparing a single “convert vs. don’t convert” scenario, the Tool uses a systematic, exhaustive search to find your sweet spot:
- Testing 101 Different Scenarios The Tool establishes a range of annual Income Targets from $0 to $1,000,000, testing in precise $10,000 increments. Each of these 101 unique targets is automatically adjusted over time to keep pace with your assumed inflation rate.
- Calculating Your Annual Conversion Amount For every single target, the Tool calculates the implied Roth conversion for each year. It does this by taking the Income Target and subtracting your other projected income sources, such as:
- Wages and pensions
- Social Security benefits
- Investment income (savings/brokerage)
- Required Minimum Distributions (RMDs) from Traditional IRAs
- Note: If your other income already exceeds the target for a given year, the Tool models $0 for a Roth conversion that year.
- Projecting the Long-Term Impact The Tool simulates your financial future through the end of your analysis period for all 101 variations. This simulation handles all the heavy lifting, accounting for:
- The annual federal and state tax cost of the conversions (calculated using official 2026 brackets, with thresholds adjusted by a separate tax inflation rate).
- Tax-free growth inside the Roth IRA.
- Taxable growth and future mandatory distributions within the Traditional IRA.
- All other modeled cash flows (income, expenses, and standard taxes).
Upon completion of all iteration projections, the Tool highlights the top 10% of Income Targets — those that produce the highest estimated after-tax net worth in the final projection year. Because the user may have secondary considerations — such as estate planning objectives or liquidity needs — that warrant selecting an Income Target different from the top-ranked result, the Tool does not automatically apply any selection. It is the user’s responsibility to evaluate the output, select the desired Income Target, and enter it into their Scenario to view the corresponding year-by-year Roth IRA conversion amounts and supporting details on the main worksheet.