Converting $35k a year before RMDs
Converting $35k/yr to age 72 ends $14,353 ahead of no conversions after tax, but pays $50,741 more tax over a lifetime. The two measures disagree.
- Which of those matters depends on what you are optimising for — ending wealth, or tax paid along the way.
- 6 years more paying IRMAA surcharges.
- All of it under the assumptions listed below, which the reader can change.
Not financial or tax advice.
Lifetime tax (present value)$210,804
Terminal after-tax wealth$666,308
Years in IRMAA6
What this assumes
Every figure below depends on these. Change one and the answer changes.
- Horizon
- 25 yearsHow many years the projection runs.
- Nominal return
- 5%Assumed annual growth before inflation.
- Inflation
- 2.5%Grows spending, and indexes brackets between published years.
- Discount rate
- 3%Used to present-value lifetime tax — the headline metric.
- Future tax law
- Current law continuesLeft on current law, the projection assumes today’s brackets last the whole horizon — itself a forecast, not a neutral choice.
Other assumptions (4)
- Dividend yield
- 1.2%
- Interest yield
- 0.8%
- Business cash return
- 2%
- Income growth
- 0%
Year by year
| Year | Age | Conversion | RMD | Federal tax | IRMAA | Net worth |
|---|---|---|---|---|---|---|
| 0 | 62 | $35,000 | $0 | $2,020 | $0 | $1,709,149 |
| 1 | 63 | $35,000 | $0 | $1,966 | $0 | $1,717,039 |
| 2 | 64 | $35,000 | $0 | $1,910 | $0 | $1,723,566 |
| 3 | 65 | $35,000 | $0 | $1,852 | $0 | $1,728,622 |
| 4 | 66 | $35,000 | $0 | $12,012 | $0 | $1,719,697 |
| 5 | 67 | $35,000 | $0 | $19,402 | $0 | $1,702,152 |
| 6 | 68 | $35,000 | $0 | $19,640 | $0 | $1,681,400 |
| 7 | 69 | $35,000 | $0 | $20,269 | $1,365 | $1,655,386 |
| 8 | 70 | $35,000 | $0 | $20,529 | $1,399 | $1,625,577 |
| 9 | 71 | $35,000 | $0 | $20,796 | $1,434 | $1,591,724 |
| 10 | 72 | $35,000 | $0 | $21,069 | $1,470 | $1,553,558 |
| 11 | 73 | $0 | $38,923 | $11,477 | $1,507 | $1,521,165 |
| 12 | 74 | $0 | $38,155 | $11,764 | $1,544 | $1,484,400 |
| 13 | 75 | $0 | $36,943 | $11,611 | $0 | $1,445,108 |
| 14 | 76 | $0 | $35,473 | $11,902 | $0 | $1,401,013 |
| 15 | 77 | $0 | $33,467 | $12,199 | $0 | $1,351,804 |
| 16 | 78 | $0 | $31,157 | $12,504 | $0 | $1,297,154 |
| 17 | 79 | $0 | $28,317 | $12,817 | $0 | $1,236,715 |
| 18 | 80 | $0 | $24,855 | $13,137 | $0 | $1,170,122 |
| 19 | 81 | $0 | $20,554 | $13,466 | $0 | $1,096,989 |
| 20 | 82 | $0 | $15,516 | $13,802 | $0 | $1,016,908 |
| 21 | 83 | $0 | $9,405 | $14,147 | $0 | $929,449 |
| 22 | 84 | $0 | $2,172 | $876 | $0 | $848,466 |
| 23 | 85 | $0 | $0 | $0 | $0 | $761,190 |
| 24 | 86 | $0 | $0 | $0 | $0 | $666,308 |