Process for evaluating the financial consequences of converting a standard form I.R.A. to the Roth form I.R.A.

摘要

Disclosed is a computer-implemented process for evaluating the financial consequences of converting a standard format IRA to a new Roth form IRA. The process includes computing and disclosing the substantial federal income tax consequences involved in converting the standard form IRA to the Roth form. It further includes multiple options that how a given IRA holder can cope with the substantial tax consequences, including without limitation how he or she will fare if he or she obtains term insurance on the federal tax liability of early withdrawal by reason of premature death, or if he or she deducts the federal taxes and insurance premium from the rollover amount, or in the alternative how he or she will fare by financing the federal tax consequences and insurance premium in order to preserve intact the entire IRA amount for rollover. Additionally, the disclosed process allows IRA holders to enter into the calculations estimated increases in federal tax rates which would be in effect in their retirement years. Whereas it is not known how the federal tax rates will change (if at all) in the ensuing years, the disclosed process will allow entry of educated guesses so that a given IRA holder can work through various chosen scenarios to see how he or she will fare under the chosen scenarios.