“It Just Doesn’t Feel Right”- Roth Conversion Calculators

Monday, January 25th, 2010 by Cass Chappell, CFP®

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Note from the author:  This is the first of many blogs dealing with the 2010 tax rule allowing anyone to convert traditional retirement funds into a Roth IRA.  The decision whether to convert is not an easy one.  There are many issues to consider.  Before I could write on the issues and factors surrounding this decision, I had to express frustration with my research thus far.  Just one blog as a vent, then moving on…….

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I have spent the last two weeks searching for a top notch computer program or application.  All I want to do is be able to easily analyze whether a Roth conversion makes sense for any client, in any scenario, with any set of assumptions.  In this day and age, you would expect to be able to find such a tool in seconds.  The dream:

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There would be several free programs or calculators that would be acceptable and could give you a “good idea” of your situation.  (note:  there are free programs and calculators, but they are terrible)

You also wouldn’t be surprised to find a few programs that cost money.  (note: there are, but they are terrible too)  For most people, the free calculators would be good enough.  For advisors like us (control freaks who just HAVE to leave no stone unturned), we would want the most advanced versions and would be willing to pay for them.  These programs would allow us more control over each and every variable…”What if” modeling would be a breeze.  The purpose of such a program isn’t as much to determine the “right answer” whether a Roth conversion is best as much as it is to get the client thinking about the relevant issues.

This would be accomplished with a graphic output that would be easy for any client to understand and simple to “tweak” as the situation called for.

Guess what?

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There isn’t one…at least not a good one…and the financial services industry should be ashamed of themselves.

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This doesn’t feel right.  In an era where there is an “app for everything”, the financial services industry has laid a big fat goose egg.

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