Roth conversion tools: Custodial offerings
Fidelity Investments introduced a free online Roth IRA conversion calculator last month to both its independent registered investment advisers and the broker-dealer clients that clear through National Financial Services LLC.
Custodial offerings
Fidelity
Fidelity Investments introduced a free online Roth IRA conversion calculator last month to both its independent registered investment advisers and the broker-dealer clients that clear through National Financial Services LLC.
The Fidelity tool was developed internally by Strategic Advisers, the company’s internal investment adviser group, and is meant to assist advisers in determining if converting retirement assets to a Roth IRA makes sense within the context of the client’s overall retirement plans. The application was built using the Adobe Flex open-source framework, which allows it to run on all major browsers.
The key inputs for the calculator are a client’s age when he or she makes the conversion, whether the client has a spouse, the state of residence, tax-filing status, estimated total household income, eligible account balances and whether eligible balances include any after-tax contribution.
One differentiator for the Fidelity tool, its creators say, is how it takes into account the current marginal tax rate, which can be adjusted. The tool provides a pop-up box with an explanation for the adviser and client of why they might need to adjust the rate depending on their situation and where they live.
At the end of the calculation process, a summary-and-analysis page is displayed that shows whether a conversion makes sense for the client and how much additional income he or she will have (or not have) following a conversion.
Estimated conversion taxes paid from taxable accounts is displayed as well as the estimated marginal federal and state tax rates that went into the calculation. A hypothetical fixed annual rate of return after adjusting for inflation is also displayed, as is a side-by-side chart that illustrates the hypothetical total value of withdrawals based on both converting the IRA and non-conversion.
Visit the Fidelity Institutional Wealth Services page for more information.
Schwab Roth IRA Conversion Calculator
This publicly available free calculator is intended for investors, but has plenty of links to additional resources. It is a good place for advisers to send their clients for initial information and to generate additional questions or as a conversation-starter prior to a more in-depth follow-up.
Schwab Roth IRA Conversion Calculator
TD Ameritrade
Similarly, TDAmeritrade Holding Corp. offers a Roth analysis tool intended for investors (link included below).
TD Ameritrade Institutional representatives advised us in October that it had a conversion tool intended for advisers as well. As is the case with the calculator at Rothretirement.com, it is hosted by Archimedes Systems Inc. with content from Convergent Retirement Plan Solutions LLC.
Roth Conversion Analyzer
Learn more about reprints and licensing for this article.
