WealthPrime Roth Conversion Engine™

Conversion inputs

First 12 years of the proposed strategy.

Definitions

Roth conversion glossary

Plain-language definitions for the vocabulary used across this module — the same wording that prints in the exported report.

Roth conversion

Moving dollars from a pre-tax account (The Plan — 401(k) or other qualified plan) into a Roth account. The converted amount is added to taxable income in the year of the conversion, and in exchange the balance — and all future growth — comes out tax-free later and is never subject to required minimum distributions.

Marginal bracket

The tax rate applied to the next dollar of income. Conversions are priced at the margin: each converted dollar stacks on top of existing income, so the bracket the conversion lands in — not the average rate — determines what the conversion costs. Currently a flagged assumption until verified federal and state brackets are loaded.

Effective Tax Rate

Total federal plus state income tax for the year divided by total taxable income for that year — the blended rate actually paid across every bracket, including the converted dollars. It is always lower than the top marginal bracket and is the honest measure of what a conversion year costs.

IRMAA

Income-Related Monthly Adjustment Amount — the Medicare Part B and Part D surcharge applied when modified adjusted gross income (MAGI) exceeds a threshold. Because IRMAA uses a two-year lookback, a conversion today can raise Medicare premiums two years later. Tiers are cliffs, not phase-ins: one dollar over a threshold triggers the full surcharge.

RMD

Required Minimum Distribution — the amount the IRS forces out of pre-tax retirement accounts each year once the beginning age is reached, calculated as the prior year-end balance divided by a life-expectancy divisor. RMDs are fully taxable, can push income into higher brackets and into IRMAA tiers, and Roth accounts are exempt from them during the owner's lifetime.

Pre-tax balance

The Plan and qualified plan dollars that have never been taxed. Every withdrawal is ordinary income to the owner or the heirs, so the balance is best read as a partnership with the IRS rather than as spendable wealth.

After-tax wealth

Roth balance plus outside after-tax cash plus the pre-tax balance discounted by the assumed future withdrawal rate. It puts both scenarios on the same footing by valuing pre-tax dollars at what they are actually worth after the eventual tax.

Conversion tax

The incremental federal plus state tax created by the converted dollars in the conversion year. Paying it from outside after-tax cash — rather than withholding from The Plan — moves the most wealth into the Roth, because the full converted amount continues compounding tax-free.