| Calculated Variable | Formula | Definition |
| ROTH_TAX_PMT_CNT | 4 | Number of annual payments that the IRS allows taxpayers to payoff ROTH IRA transfer taxes |
| YRS_BF_RTR | AGE_ATR - AGE | Number of years before retirement account withdrawal or redemption begin. |
| AGE_DEATH | AGE_ATR + YRS_AF_RTR | Age retirement ends |
| ROR_AF_TAX | ROR_INVEST * ( 1- TAX_RATE_INVEST) | Effective rate of return on taxable investments after taxes are paid |
| ROTH_TAX_TOT | (AMT - AMT_AF_TAX) * TAX_RATE | Total taxes due if transfer to ROTH IRA is made from regular IRA, assuming all contributions to the regular IRA were made as deductible contributions. |
| ROTH_TAX_PMT | ROTH_TAX_TOT / ROTH_TAX_PMT_CNT | Annual tax payment due to IRS if transfer is made |
| IRA_BF_TAX_ATR | AMT / (1+ ROR_INVEST)^ (-1* YRS_BF_RTR) | Total regular IRA account value at retirement |
| IRA_TAX_ATR | IRA_BF_TAX_ATR * TAX_RATE_ATR | Taxes due on regular IRA account if entire account cashed in as a lump sum |
| IRA_TAX_PMT_RTN_ATR | SUM i = 0
to (ROTH_TAX_PMT_CNT-1) [ (ROTH_TAX_PMT) / (1+ ROR_AF_TAX)^(-1 * (YRS_BF_RTR - i )) ] |
If you invested the money that you would have paid in taxes to rollover an IRA to a ROTH IRA, this is the amount that investment would be worth at retirement. This assumes the investment was made in an ordinary taxable account, an is calculated as after tax. |
| IRA_AF_TAX_ATR | IRA_BF_TAX_ATR - IRA_TAX_ATR | Net value of regular IRA at retirement, after taxes |
| IRA_TOT_ATR | IRA_AF_TAX_ATR + IRA_TAX_PMT_RTN_ATR | Net value of regular IRA after taxes plus return accumulated in taxable account based on potential return of invested tax liability paid to roll over to a ROTH IRA |
| ROTH_TOT_ATR | IRA_BF_TAX_ATR | Total ROTH IRA account value at retirement, of which no taxes are due |
| ATR_$_DIFF | ROTH_TOT_ATR - IRA_TOT_ATR | Difference in the ROTH IRA account value at retirement and the regular IRA account value at retirement |
| ATR_PERC_DIFF | ( ROTH_TOT_ATR / IRA_TOT_ATR ) - 1 | Percentage advantage of the ROTH IRA account value at retirement and the regular IRA account value at retirement. |
| ATR_NPV | ATR_$_DIFF /
(1+ROR_AF_TAX) ^(YRS_BF_RTR) |
The net present value of the ROTH IRA advantage.
This is the additional amount that would have to be deposited into a taxable
account today to provide the same total return as provided by the ROTH
IRA.
For example: (Regular IRA Balance at retirement) + (Value of a taxable account opened today with the ROTH IRA tax payments instead of rolling over account ) + ( Value of a taxable account opened today with the a dollar amount equal to the NPV of ROTH IRA at retirement) Should Equal Total ROTH IRA account value at retirement, of which no taxes are due. |
| ATR_ADV_MSG | ATR_NPV is
Positive= "ROTH IRA" Negative= "Regular IRA" |
Text that indicates which IRA option is the superior choice |
| IRA_BF_TAX_AMRT_PMT | IRA_BF_TAX_ATR / ( ( ( (1+ ROR_INVEST) ^(YRS_AF_RTR) - 1 ) / ROR_INVEST) /(1+ ROR_INVEST)^( YRS_AF_RTR) ) | If you were to amortize the withdrawals of your IRA into equal yearly redemption through your retirement, this would be your annual withdrawal before taxes. |
| ROTH_AMRT_PMT | IRA_BF_TAX_AMRT_PMT | If you were to amortize the withdrawals of your IRA into equal yearly redemption through your retirement, this would be your annual withdrawal before taxes. Without the effect of taxes it is the same as the regular IRA amortized withdrawal. |
| IRA_AMRT_TAX | IRA_BF_TAX_AMRT_PMT * TAX_RATE_ATR | Taxes due on each withdrawal from regular IRA account, if balance is amortized at retirement |
| IRA_AF_TAX_AMRT_PMT | IRA_BF_TAX_AMRT_PMT - IRA_AMRT_TAX | Net amount of each amortized withdrawal from regular IRA after taxes |
| IRA_AF_TAX_AMRT_TOT | ( IRA_AF_TAX_AMRT_PMT *(((1+ ROR_AF_TAX)^ YRS_AF_RTR -1)/ROR_AF_TAX))/(1+ ROR_AF_TAX)^( YRS_AF_RTR) | Value of all of the withdrawals at retirement. This amount is greater than the lump sum total due to the value of the tax savings that is produced during your retirement years. ( This is the NPV at retirement of the stream of payments produced by amortizing the after tax regular IRA account withdrawals. The discount rate is the effective rate of return after taxes. ) |
| ROTH_TOT_AMRT | (ROTH_AMRT_PMT *(((1+ ROR_AF_TAX)^ YRS_AF_RTR -1)/ROR_AF_TAX))/(1+ ROR_AF_TAX)^( YRS_AF_RTR) | Value of all of the withdrawals at retirement. This amount is greater than the lump sum total due to the value of the tax savings that is produced during your retirement years. ( This is the NPV at retirement of the stream of payments produced by amortizing the ROTH IRA account withdrawals. The discount rate is the effective rate of return after taxes. ) |
| IRA_TOT_AMRT | IRA_AF_TAX_AMRT_TOT + IRA_TAX_PMT_RTN_ATR | Value of regular IRA payment withdrawals plus the value of the taxable account created with the money that would have been paid in taxes, if the ROTH IRA transfer had occured. |
| AMRT_$_DIFF | ROTH_TOT_AMRT - IRA_TOT_AMRT | Difference in the ROTH IRA account value at retirement and the regular IRA account value at retirement |
| AMRT_PERC_DIFF | ROTH_TOT_AMRT / IRA_TOT_AMRT | Percentage advantage of the ROTH IRA account value at retirement and the regular IRA account value at retirement. |
| AMRT_NPV | AMRT_$_DIFF /
(1+ROR_AF_TAX) ^(YRS_BF_RTR) |
Net present value of the ROTH IRA advantage when amortizing the IRA accounts. ( please see ATR_NPV ) |
| AMRT_ADV_MSG | AMRT_NPV is
Positive= "ROTH IRA" Negative= "Regular IRA" |
Text that indicates which IRA amortization option is the superior choice |
| AF_TAX_ROTH_AMT | AMT - ROTH_TAX_TOT | Total Amount deposited in Roth IRA Account if taxes are paid from regular IRA deposit |
| AF_TAX_ROTH_TOT_ATR | AF_TAX_ROTH_AMT / (1+ ROR_INVEST)^(-1* YRS_BF_RTR) | Total Roth IRA account balance at retirement, based on above amount |
| AF_TAX_ROTH_$_DIFF | AF_TAX_ROTH_TOT_ATR - IRA_AF_TAX_ATR | At retirement difference in ROTH IRA account balance and After tax balance of regular IRA |
| AF_TAX_ROTH_PERC_DIFF | (AF_TAX_ROTH_TOT_ATR/ IRA_AF_TAX_ATR) - 1 | Percentage advantage ( or disadvantage) of the ROTH IRA account value at retirement and the regular IRA account value at retirement. |
| AF_TAX_ROTH_NPV | AF_TAX_ROTH_$_DIFF / (1+ROR_AF_TAX)^(YRS_BF_RTR) | Net Present value of a ROTH IRA balance transfer of this type. |
| AF_TAX_ROTH_ADV_MSG | AF_TAX_ROTH_NPV is
Positive= "ROTH IRA" Negative= "Regular IRA" |
Text that indicates which IRA option is the superior choice if taxes are paid from the regular IRA account. |