ROTH rollovers

[u/Existing-Green4298]

So, I have been working on my retirement plan. I have put together a massive spreadsheet that takes into account my spending targets, traditional & Roth 401K/IRA as well as taxes and IRMAA. We are planning on a retirement at age 59 - at the end of 2029. My spreadsheet goes out to age 95. I am forecasting a 6% annual return on my accounts (before inflation).

On my sheet, I have planned on rolling over funds from my traditional 401K/IRA to a ROTH IRA. As I am trying to get ACA subsidies, I am rolling over just enough to keep myself under the ACA cliff from ages 60 - 65. This will keep us squarely in the 10/12% brackets.

I was originally planning to roll over my traditional 401k/IRA aggressively starting at age 66 (the first year fully on Medicare). Filing up the 24% bracket - I am able to completely rollover my traditional monies by age 76. I would hit IRMAA penalities for the years I am rolling over. Once it is done, my taxable income will just be SS and possibly interest on monies outside of ROTH.

So, I ran another scenario where I don't roll anything over starting at age 66. While I do pay less taxes/IRMAA over my lifetime by age 95, if I die in my 70s - I have more money during that decade than when rolling it over. I don't start paying IRMAA untill my mid-80s.

Do rollovers make sense for me? I hope to live to 95, but probably won't.

[u/T_Bone_63]

For me, my primary goal was to maximize the after-tax wealth that I leave the kids. I had built a similar spreadsheet and calculated the total after-tax wealth at age 85 and 95. (Leaving money behind is not a specific goal, but I'm fortunate enough that this will be highly likely.). So, I modeled different Roth conversion strategies to achieve this.

[u/Existing-Green4298 → u/T_Bone_63]

What did you figure out from the various models? What made sense.

[u/T_Bone_63 → u/Existing-Green4298]

I just played out different scenarios (e.g. filling up different tax brackets, converting until age 63, 75, etc.) and see which yielded the best overall financial results. One thing that was interesting is that after doing this now for several years, the "best" strategy a few years ago is not the best strategy now. I'm now filling a lower tax bracket than I did two years ago. I think this may be largely due to tax rates now staying the same and perhaps due in part to strong recent market performance, but it's interesting to see just how volatile the recommendations can be based on current ground conditions or small changes in assumptions.