Roth Conversion Options in Income InSight

Roth Conversions to the 10%, 12%, 22%, and Lifetime Effective Marginal Rate

 

  • 10%: When selected, the software will not convert an amount that will push the Effective Marginal Rate above 10% in that particular year. 
  • 12%: When selected, the software will not convert an amount that will push the Effective Marginal Rate above 12% in that particular year. 
  • 22%: When selected, the software will not convert an amount that will push the Effective Marginal Rate above 22% in that particular year. 
  • Lifetime: When selected, the software will not convert an amount that will push the Effective Marginal Rate in a given year above the overall Lifetime Effective Rate. With this selection, if the Effective Marginal Rate in a particular year is already at 22%, but the lifetime rate is at 12%, you would not see a conversion in that year.

    The Lifetime Effective Rate is calculated by dividing total tax / total cashflows over the course of the client's lifetime. Currently, lifetime tax is displayed in the Income InSight report, in the "Base Case: Income by Source” section. 

      Example

      • Lifetime Tax = $149,240 
      • Total Cashflows = $1,581,915.06 
      • Lifetime Effective Rate is: $149,240 / $1,581,915.06 = 9.43%