Recharacterization Analysis?
Is there a calculator or anaylsis tool that can be used to determine if it makes sense to recharacterize a Roth conversion when the account value has declined?
Is there a calculator or anaylsis tool that can be used to determine if it makes sense to recharacterize a Roth conversion when the account value has declined?
Permalink Submitted by Alan Spross on Wed, 2011-08-31 21:23
I don’t know of any, but you could use a regular conversion calculator, but use the value of the conversion now and the actual tax bill for the original amount converted. That will equate out to a higher marginal tax rate for the conversion vrs your estimated rate in retirement. If the loss is small it may still make sense, but for every dollar lost the decision tilts toward recharacterization.
Permalink Submitted by Bruce Steiner on Wed, 2011-08-31 22:45
There are too many variables, such as the tax rate when you convert again.