How to set up a Roth conversion

See the video and additional information below.

Setting up a Roth conversion is pretty simple.

Although you do not have to do so in an Alternative Profile, it's helpful to do so because you can then see the two reports side by side and thus more easily evaluate the impact of the Roth conversion.

Begin by clicking on the area at the top by Base Profile and use the drop down selector to create an Alternative Profile. You can name it Roth Conversion.

Next, choose one of the retirement accounts for either spouse (if married) and MODIFY the IRA or 401(k) that you want to use to convert. Next, scroll down to the Roth Conversion Amount and enter the annual amount for the year or years you wish to convert. After completing that form, click SAVE at the bottom of that form.

Finally, select Profile Dashboard and then in the Comparison Report panel, click Run Report.

You can now evaluate the impact of this Roth conversion by comparing the two reports, noting first off the change in annual discretionary spending.

This case study may be helpful in understanding how Roth conversions can work.