Table 6. Keeping Assets in a Deductible IRA vs. Converting: Current Retirees (A 65-Year-Old Investor Converting $500,000)
Marginal Tax Rate in Retirement (%) Total Aftertax Withdrawals in Retirement Conversion Advantage (Disadvantage) When Converting is Worthwhile
Roth IRA
($)
Deductible IRA
($)
Taxable Side Acct
($)
Total Value of Deductible IRA Plus Taxable Side Account
($)
($) (%)
19.75% $1,028,051 $830,151 $320,610 $1,150,760 ($122,710) -10.7% Never
28.75 1,028,051 732,486 318,637 1,051,123 (23,072) -2.2 For amounts less than $241,683
31.60 1,028,051 703,187 318,047 1,021,234 6,817 0.7 Always
38.25 1,028,051 634,821 316,670 951,491 76,560 8.0 Always
The assumptions for this table are the same as for Table 5, except in this case the amount converted from the deductible IRA is $500,000, pushing the investor into the 38.25% tax bracket. The tax due on the converted amount is $178,203, which is the amount that would be invested in the tax savings account if the conversion is not done.

Source: T. Rowe Price Associates, Inc.