Roth vs traditional vs taxable can't be accurately modeled till we implement taxes in the planner. But in the meantime, you can use the following approach to get a rough picture:what about if I do Roth conversions? I'm hoping to not include the extra income taxes used to do Roth conversions in the annual spending level as recommended by TPAW. I look at the extra income taxes for Roth conversions as pre-paying the taxes on money that I will actually spend (tax-free) in a future year. Does this make sense, or am I missing something? Should I be reducing the balance in my pre-tax account by the average tax rate that will be paid on that money before I include that money in my TPAW total portfolio amount? If so, should I do the same with the balance in my taxable account?
- If most of your savings is in traditional accounts, enter pre-tax income and consider the monthly spending and savings shown in the graph to be pre-tax
- If most of your savings is in Roth accounts, enter post-tax income and consider the monthly spending and savings shown in the graph to be post-tax
- If most of your savings is in taxable accounts, enter post-tax income, reduce the expected return to account for the tax drag, and consider the monthly spending and savings shown in the graph to be post-tax
Statistics: Posted by Ben Mathew — Sun Feb 02, 2025 8:20 pm