Modeling Roth conversions

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Joined: Thu Feb 28, 2008 6:48 pm

Re: Modeling Roth conversions

Post by jimr »

Roth Conversions don't create any income cash flows since they just involve a transfer of funds between the tax deferred and tax free portfolios. I can see how it might be desirable for the taxable income column to show something more like "total taxable income from all sources," but that's not how it works. The taxable and tax free income columns just show the aggregate of all the income cash flows that were entered on the main page and in additional inputs for each year. This is consistent with how RMDs are treated, which are technically "taxable income" but which also don't get aggregated into the "taxable Income" cash flow column.

I wonder if there's a better name for these income "cash flow" columns to indicate that these are really just echoing the inputs and aren't really simulation outputs?
Posts: 15
Joined: Fri Dec 20, 2019 8:41 am

Re: Modeling Roth conversions

Post by target2019 »

Thanks Jim.
I realize I don't know enough accounting and will try to understand the workings of FRP better.
I was confused by the labels on some columns as they suggest some relation to US tax forms. But I was making an assumption there.
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