# User talk:Fyre4ce/Roth conversion

## Relative value of contributions and conversions

Define variables:

The overall value of a change to tax-advantaged space is equal to:

Consider a given after-tax investment that can be contributed to a traditional account, a Roth account, or used to pay the taxes on a Roth conversion. When making a traditional contribution, the change in traditional balance is:

Therefore, the change in value when making a traditional contribution is:

When making a Roth *contribution*, the change in Roth balance is simply:

Therefore, the change in value when making a Roth contribution is:

When making a Roth *conversion*, the converted amount is:

Therefore, the change in value when making a Roth conversion is:

When (current marginal tax rate is *less than* predicted future marginal tax rate),

When (current marginal tax rate *equals* predicted future marginal tax rate),

When (current marginal tax rate is *greater than* predicted future marginal tax rate),

--Fyre4ce 23:10, 10 March 2020 (UTC)

## Conversions on estates subject to estate tax

Define variables:

When a Roth conversion is performed on assets, during the owner's life on assets expected to be subject to estate tax, and the taxes can be paid from after-tax assets, the net effect on types of assets are as follows:

The change in after-tax value of the estate to heirs will be as follows:

It follows that Roth conversions increase the value of the after-tax value of the estate if:

or

--Fyre4ce 04:44, 10 December 2020 (UTC)