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Any downside to converting 100% of a $5,000,000 IRA to a Roth IRA on J


Guest MTL-CPA
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Mr. JohnG.

I don't disagree with many of your valid comments about roar program. I also read the FAQ's, but like many FAQs I'd go so far as to call them Questions They Frequently Wish People Would Ask - so they can disguise their sales pitch as answers to questions.

Easy to use and understandable are somewhat subjective. I feel it is but I've use it for over a week or so, and I have only the BM program to compare it to.

Is the built in tax stuff a Ho Hum or not? I'm sure its guesses are far better than mine, but your guesses may be better than its guesses. If so you should use your guesses.

No out of range checks, model testing, experience, etc. are clearly deficiencies.

Do you need 18 parameters for house purchases and sales? Probably not unless you're going to buy and sell a house. I'd think you would need some parameters for buying and selling a house as this could have a significant impact on the type, growth and taxation of your assets, and possibly on your annual taxes if a mortgage was started or ended.

And yes, the more I've looked into this subject the more important I feel the details are. If the details improve tax

determinations significantly then they are important. I suppose the question is how much/what is significant.

I can't confirm or deny how your "conceptual structure or theory outlined would not apply to this large asset scenario". Mr. BPickerCPA may have poked one hole in it. My opinion is it's much to simplistic to be valid considering that other taxes besides the IRA withdrawal taxes also apply. I do know that for the BM program runs I mentioned earlier the conversion taxes were about 46% and the IRA withdrawal taxes were about 31%, and the Roth conversion didn't appear to be the best choice. I believe annual taxes on the applicable portion of the appreciation of the non-IRA assets, the taxes (likely long term capital gains) on the sale of these appreciated non-IRA assets, and how these assets are affected by estate and income taxes are also very important in evaluation of a Roth conversion. It isn't obvious to me your theory addresses any of these factors.

Also, it's difficult to debate this issue without some numbers to review and quibble over. I've tried to give examples that can be checked; those disagreeing have not.

While I did find "one" case where the Roth was best, it's important to note that this was for only one xM of yM conversion - not all conversions. There would be many more cases where the Roth would be best for that xM of yM conversion if the annual spendable income were above a certain level. That level most likely being where the taxes on the IRA withdrawals needed to provide the bigger spendable incomes were high enough to offset the lower cap gains and absence of heir's income taxes for non-IRA assets, and thus making the Roth the best option. This is one of the reasons that led me to conclude that proper tax estimates are critically important in a conversion analysis and that conversions are not amenable to analysis on a hand calculator - or even an abacus.

And no one should believe a black box output anymore than believing a questionable theory. They should analyze the numbers - and then make excuses why numbers that are in conflict with their opinion are wrong . Also, what were the odd and inconsistent assumptions.

Who was the 2nd person and when were the postings made?

In conclusion let me restate that both of the programs' results may be wrong, I may have made a mistake, misinterpreted the data or used bad assumptions, etc, and my opinion may be all wet. I just haven't seen anything factual yet that convinces me it's wrong. I realize the experts disagree with my conclusions, but disagree based on what. Mr. Mueller did comment that he believed many Roth conversions were wrong but he wasn't specific in why he believed this.

-------Mr. Steiner--------

This is probably a repeat question I asked earlier to somebody, but what are the benefits of putting more money in the IRA, no required IRA withdraws, money in a tax-free IRA account, etc. IF these benefits result in less after-tax money in the heir's pocket initially or over time.

If my parents wanted to either opt for a Roth because of these benefits and it would put 1M in my pocket, or stay with the regular IRA and I'd wind up with 1.5M in my pocket, I'd hope they would pass on the Roth's "benefits" and stick with the regular IRA. Isn't the objective to maximize the heir's after-tax money? I'm sure the results of the two programs used in the analyses "applied" these benifits. The analyses may be incorrect, but what if they

aren't.

Art

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