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Detailed Instructions: Traditional IRA Withdrawal and Roth Conversion Calculator
Why use this calculator?
Optimizes traditional withdrawals and Roth conversions to minimize ACA (healthcare) costs and taxes while maximizing terminal wealth. It models the complex interaction between MAGI, ACA subsidies, and long-term portfolio growth.
How to use it
Enter your current account balances and expected retirement spending. The calculator will run multiple simulation passes to find the optimal MAGI target for each year, balancing immediate tax/healthcare savings with future RMD risks and tax-free growth.
Example Inputs
Try these inputs to interpret the results correctly:
Portfolio & Spending
| Parameter | Example Value | Description |
|---|---|---|
| Traditional Balance ($) | $140,000 | Starting balance in tax-deferred accounts (IRA/401k). |
| Roth Balance ($) | $800,000 | Starting balance in tax-free accounts (Roth IRA/401k). |
| Cash Balance ($) | $0 | Starting balance in taxable brokerage or cash accounts. |
| Target Spend ($) | $100,000 | Annual after-tax spending goal in today's dollars. |
| Start Age | 65 | Age at which you plan to retire and want to start the simulation. If you use a value less than 65, the Avoid Medicaid option will be used; see below. |
| Final Age | 95 | Age at which you plan to stop the simulation. The simulation will run for this many years and fail (not retrun a result) if you run out of money. |
Social Security & Household
| Parameter | Example Value | Description |
|---|---|---|
| SS Benefit ($) | $80,000 | Annual Social Security benefit at full entitlement age. |
| SS Start Age | 67 | Age at which you plan to start Social Security. |
| Household Size | 2 | Number of people in the household for ACA subsidy calculation. |
| Filing Status | Married Filing Jointly | Tax filing status. |
| State | CO | State of residence (impacts Medicaid floor targets). |
Market & Other
| Parameter | Example Value | Description |
|---|---|---|
| Real Return (%) | 4.0% | Expected average annual real return (inflation-indexed). |
| Real Return Stdev (%) | 4.0% | Expected annual volatility. |
| Market Premium ($) | $14,000 | Annual unsubsidized cost for a Silver ACA plan per person. |
| Spouse Age Diff | 0 | Age difference with spouse (negative if spouse is younger). |
| Cash in Taxable (%) | 50% | Percentage of taxable account held in income-producing cash vs. stocks. (Used to determine income tax; income vs capital gains.) |
Simulation Controls
| Parameter | Example Value | Description |
|---|---|---|
| Avoid Medicaid | Checked | Ensures annual income (MAGI) stays above Medicaid thresholds (state required % of FPL). This prevents Medicaid enrollment and maintains eligibility for ACA Premium Tax Credits (PTC). Only used when Start Age is less than 65. (Uncheck to allow MAGI to drop below Medicaid thresholds, which reduces healthcare costs assuming you want Medicaid and not ACA healthcare.) |
| Enable Lookahead | Checked | Uses a multi-year greedy rollout to find strategies that maximize multi-year outcomes rather than just the current year (Premium). (Uncheck to use a single year greedy rollout, which optimizes for the current year without considering future years.) |
Example Output