Chuck Eglinton 2026-02-24 ChuckEgg+roth@gmail.com
The 401K to ROTH spreadsheet is at the Google Sheets link below:
401K Roth Conversion Spreadsheet Public
PROTECT YOUR FINANCIAL INFORMATION, option 1. Use Google Docs: Make a copy of the spreadsheet on your own Google Drive: Select “FILE > MAKE A COPY”
PROTECT YOUR FINANCIAL INFORMATION, option 2 Use Microsoft EXCEL:
Select “FILE > DOWNLOAD > MICROSOFT EXCEL (.XLSX) to download an Excel compatible version to your local computer then use Excel to make modifications.
The full instructions are at the Google Docs link below:
401K Roth Converstion Spreadsheet Instructions Public
| SCENARIO: It might seem logical to think, “My 401(k) grows at 6% a year, and my Roth grows at 6% a year — so it doesn’t really matter which one I use. When I retire, I’ll just withdraw from the 401(k), pay my tax rate, and end up with the same result.”But that’s not necessarily true, especially for 401K balances of $1MM or more. Over time, your 401(k) could grow so large that withdrawals push you into a much higher tax bracket — possibly 33% or more — and even trigger extra Medicare IRMAA surcharges. By converting some of your 401(k) to a Roth gradually each year. You can typically pay a much lower tax rate, as low as 16%, if the conversion is completed over multiple years.There’s also the risk that federal tax rates could rise in the future, or that you’ll face higher rates once you’re filing as single instead of married filing jointly. And when you leave a 401(k) to your heirs, they must withdraw the full balance within 10 years — often pushing them into higher tax brackets. Roth accounts, on the other hand, still must be withdrawn in 10 years, but pass to heirs tax-free. |
The purpose of this spreadsheet is to provide a direct comparison of a 401K balance and a ROTH balance when over time there will likely be changes to tax filing status, federal tax rates and potential Medicare IRMAA surcharges based on 401K withdrawals and Adjusted Gross Income.
What the spreadsheet calculates:
- A comparative balance of a 401K and Roth, assuming the annual gain % is constant between both accounts.
- Federal Taxes based on your adjusted gross income (AGI) and Tax Filing status.
- Your annual Social Security benefits, based on the monthly benefit amount you provide and your first entitlement date.
- Your Medicare IRMAA Surcharges for parts B & D based on your Adjusted Gross Income (AGI) and filing status
- Annual Gain as a line-by-line dollar value assuming the percent gain remains constant (see cell [F2])
I asked ChatGPT: “What 401K balance would justify accelerating a pre-tax IRA/401K Conversion to a ROTH IRA rather than using the typical 4% IRA withdrawal rule?”
Here are rough “tipping points” for a married couple filing jointly:
- <$750k in pretax accounts…
No ROTH conversion needed. 4% withdrawals can work fine without a major Roth conversion. RMDs (Required Minimum Distributions) often stay manageable, especially if Social Security plus other income is modest. - $750k – $1.5M in pretax accounts…
At this level, partial Roth conversions (filling the 22% or 24% tax bracket before current federal brackets expire) can save some money in taxes and Medicare IRMAA surcharges. This is the gray zone. RMDs will eventually exceed 4% and can push income well above $100k/year in your 70s and 80s. - >$1.5M in pretax (401K) accounts…
An accelerated Roth conversion strategy can save tens of thousands of dollars in taxes and Medicare IRMAA surcharges. RMDs in 70s and 80s would likely exceed $70k/year, and by the time both Social Security Benefits are added, you will likely hit higher tax brackets and multiple IRMAA surcharges for each year. Also, in later years, a surviving spouse could potentially be required to file as a single taxpayer, which compresses federal tax brackets and makes the tax hit even greater.
1. Balance Thresholds Where Roth Conversions Shine
ChatGPT says, 2. Why “The 4% Rule” may unnecessarily cost you hundreds of thousands of dollars …
The 4% Rule, recommended by many accountants, suggests that you can withdraw 4% of your initial retirement savings in the first year (for example, from a 401K) and then adjust that amount annually for inflation, with a high probability of your money lasting for 30 years. However, the 4% rule isn’t a great fit for people with more than $1M in a 401K because it ignores important tax, medicare surcharges (IRMAA) and legacy factors:
- The 4% rule doesn’t adjust for one spouse living much longer than the other. All withdrawals from our 401(k) are taxable, and the survivor may ultimately face significantly higher taxes when filing as a single filer rather than married filing jointly.
- “Tax Bomb” With a 401K greater than $1M, RMDs will eventually force withdrawals larger than 4%, creating bigger tax bills after age 70. Doing Roth conversions early could shrink future required RMDs and grow the (after-tax) money tax-free in the Roth.
- When our kids inherit our retirement account, it must be depleted within 10 years. If it is a pre-tax account (401K), they must pay high taxes based on a 10-year withdrawal schedule. However, Roth assets pass absolutely tax-free to our kids.
- With 4% withdrawals and RMDs, your gains will likely keep rising and may push you into higher Medicare IRMAA brackets as you age. By doing Roth conversions early, you might face higher IRMAA costs for just a few years. Still, those conversions can greatly reduce or even eliminate ALL future IRMAA surcharges, which can be substantial.
- Early Roth conversions help reduce the taxable growth “snowball” in a 401(k) by preventing large 401K pre-tax balances from compounding unchecked and inflating future Required Minimum Distributions (RMDs), which are fully taxable. By converting to a ROTH earlier, you effectively cap the growth in the taxable account and shift all future gains into the Roth, where they can grow tax-free.
- Large Roth Conversions from a 401(k) are a trade-off: short-term pain (higher premiums and taxes while converting) for the benefit of large long-term savings on Medicare IRMAA surcharges and the possibility of taxation at a single-filer rate or higher future Federal tax rates if the government increases the tax rates.
- Rapid conversion from 401K to a Roth avoids possible future Federal Income Tax Rate increases – The One Big Beautiful Bill Act (OBBBA), extended the individual income tax rates established by the Tax Cuts and Jobs Act (TCJA) of 2017 which will remain in effect through at least 2028 or 2029. If Congress does not act to extend certain provisions, some tax benefits may expire after 2025. For example, which could lead to higher marginal tax rates for many taxpayers. For instance, a single filer earning $50,000 in taxable income in 2025 would fall into the 22% marginal tax bracket. However, under the pre-TCJA rates projected for 2026, that same income would place them in the 25% bracket (3% more in additional federal taxes).
3. Practical Conversion Guideline
Instead of “when balance hits $X,” it’s more about using today’s lower brackets to avoid tomorrow’s higher ones:
- Target is filling the 22% or 24% federal tax brackets before they potentially revert higher.
- Aim to get pretax balances down so that future RMDs + Social Security keep you under the 24% bracket and ideally below key IRMAA cliffs. Medicare’s income-related monthly adjustment amount (IRMAA) surcharge works where exceeding an income threshold by even one dollar triggers the entire higher premium for that bracket.
- For many couples, this means converting enough so that their remaining traditional IRA/401k by age 73 is <$1M.
? Rule of thumb:
If your combined pretax retirement accounts exceed ~$1M, you should at least run Roth conversion scenarios. If they exceed ~$1.5M, accelerating Roth conversions usually makes more sense than relying purely on the 4% rule.
