Roth Conversion Optimizer

What Is a Roth Conversion?

A Roth conversion moves money from a Traditional IRA (or Traditional 401(k) rolled into an IRA) into a Roth IRA. The converted amount is added to your taxable income for the year, and you pay ordinary income tax on it. In return, the money grows tax-free in the Roth and qualified withdrawals are never taxed again.

The strategic question is not whether to convert, but how much to convert each year. Converting too much in one year pushes you into a high bracket; converting too little leaves money in the Traditional account to be taxed later (possibly at higher rates, especially once RMDs force distributions).

The Bracket-Filling Strategy

The core optimization: in years where your taxable income is low (the gap years between retirement and Social Security onset, or before RMDs begin), you can convert just enough to "fill" the lower tax brackets. For example, if a married couple has $40,000 in other income and the top of the 12% bracket is $96,950, they could convert up to $56,950 at a blended rate well below 12%.

Lontevis automates this by computing the optimal conversion amount for each year over a multi-year planning horizon (typically from retirement through age 90+), considering:

• Current and projected future taxable income (pensions, Social Security, part-time work)
• Current and projected future tax bracket schedules (accounting for TCJA sunset provisions)
• The traditional IRA balance trajectory under different conversion scenarios
• Future RMD obligations (which reduce the benefit of conversion by forcing taxable distributions regardless)
• State tax implications (some states exempt retirement income but tax Roth conversions)

IRMAA Cliffs

The most dangerous pitfall in Roth conversion planning is triggering IRMAA (Income-Related Monthly Adjustment Amount) surcharges on Medicare premiums. Because IRMAA is based on MAGI from two years prior, a large conversion at age 63 can increase premiums at age 65 (when Medicare begins).

The IRMAA thresholds for 2026 (based on 2024 income) for married filing jointly:

Lontevis sets hard constraints at each IRMAA cliff. The optimizer will never recommend a conversion amount that pushes MAGI above an IRMAA threshold unless the tax savings from conversion exceed the total IRMAA surcharge cost over the affected years.

Multi-Year Planning Horizon

Single-year Roth conversion advice is nearly useless because the decision depends on what happens in future years. Lontevis models the full horizon:

• Pre-SS gap (ages 62--66): Typically the highest-value conversion years due to low taxable income
• SS onset (age 67--70): Social Security adds $20K--$40K in taxable income, reducing conversion capacity
• Pre-RMD window (ages 67--72): Last opportunity to reduce the Traditional balance before forced distributions begin
• RMD phase (73+): Conversions may still be beneficial if RMDs alone do not fully fill the current bracket

The optimizer outputs a year-by-year conversion schedule, showing exactly how much to convert and at what effective tax rate. It also reports the cumulative tax savings compared to a no-conversion baseline and the projected RMD reduction achieved.

TCJA Sunset Consideration

The Tax Cuts and Jobs Act provisions are scheduled to expire after 2025, potentially reverting brackets to higher pre-2018 levels. If TCJA sunsets, the 12% bracket becomes 15% and the 22% bracket becomes 25%. Lontevis models both scenarios (extension and sunset) and reports the conversion strategy that is robust to either outcome.

API Endpoint

curl -X POST https://api.lontevis.smarttechinvest.com/v1/optimize \
  -H "X-API-Key: lon_your_api_key_here" \
  -H "Content-Type: application/json" \
  -d '{
    "current_age": 62,
    "filing_status": "married_jointly",
    "traditional_balance": 950000,
    "roth_balance": 150000,
    "taxable_balance": 300000,
    "annual_spending": 65000,
    "ss_monthly": 2800,
    "ss_start_age": 70,
    "other_income": 12000,
    "state": "TN",
    "include_roth_conversions": true,
    "irmaa_aware": true,
    "tcja_sunset": "model_both",
    "planning_horizon": 95
  }'

Response Fields

• conversion_schedule -- year-by-year array with recommended Roth conversion amount and effective tax rate
• total_converted -- sum of all conversions over the planning horizon
• total_tax_on_conversions -- present value of taxes paid on conversions
• lifetime_tax_savings -- PV of tax savings vs. no-conversion baseline
• rmd_reduction -- projected reduction in cumulative RMDs due to lower Traditional balance
• irmaa_impact -- any IRMAA surcharges incurred and net savings after accounting for them