How the simulation works
Each year of the projection, the engine grows your three accounts at your assumed return, computes any required minimum distribution (RMD) from your traditional balance, applies your planned Roth conversion, then solves for how much to withdraw from taxable, traditional, or Roth accounts to cover your spending goal and the resulting federal tax — the withdrawal and the tax depend on each other, so the engine iterates until the numbers stabilize to within a dollar.
Tax is computed with the full federal stack: the standard deduction (including the 65+ add-on and the temporary 2025–2028 senior deduction), seven ordinary brackets, capital-gains stacking for taxable-account sales, the 3.8% net investment income tax where it applies, and the statutory formula that determines how much of your Social Security becomes taxable. Brackets, deductions and IRMAA thresholds are inflation- indexed from 2026 values so a 25-year projection doesn't overstate taxes.
The marginal rate column answers the most useful question: if you converted $1,000 more this year, what tax would that dollar face? That rate is often far above your bracket — see below.
The Social Security tax torpedo
Social Security becomes taxable as your “provisional income” (other income plus half of your SS benefit) crosses $25,000/$32,000 (single) or $32,000/$44,000 (joint). Between the first and second thresholds, each extra dollar of income drags up to 85 cents of SS into taxable income — a married filer in the 12% bracket can face an effective 22.2% marginal rate, and in the 22% bracket up to 40.7%. This is exactly why the conversion window before RMDs begin often looks cheap, and why converting too much in the wrong year is expensive: the marginal-rate chart shows the torpedo as it happens.
How IRMAA cliffs work
Medicare income-related premium surcharges are assessed on a two-year lookback: your 2026 MAGI sets your 2028 Part B and D premiums. The brackets are cliffs, not phase-ins — a single filer at $108,999 MAGI pays the standard premium, at $109,001 pays roughly $1,150 more per year. The table flags every year whose MAGI crosses a cliff and shows how many dollars of room remain below the next one, so an auto-plan can deliberately stop just short.
Sources & methodology
- Federal brackets, standard deduction, 65+ add-on and the temporary senior deduction: IRS Rev. Proc. 2025-32 (2026 tax year).
- Capital-gains rates and thresholds: IRS Topic 409 / Rev. Proc. 2025-32.
- Social Security taxation: IRC §86; thresholds are statutory and not inflation-indexed.
- NIIT: IRC §1411 (3.8% above $200k/$250k MAGI on investment income).
- RMD ages: SECURE 2.0 (73 for those born 1951–1959, 75 for 1960+); divisors from the IRS Uniform Lifetime Table (2022 final).
- IRMAA: 2026 CMS premium tables assessed on 2024 MAGI; thresholds and surcharges inflation-indexed in projection years.
All table values carry their as-of dates in the source code; tax parameters are indexed annually at your inflation assumption, which approximates — but cannot predict — future official adjustments.
Limitations
- Federal tax only; state income tax is not modeled.
- Married couples are modeled as the same age; the younger-spouse RMD table is not used.
- Taxable-account sales are assumed all long-term gains at a constant basis share; ordinary dividends inside the taxable account are not modeled.
- No ACA premium cliffs (pre-65 marketplace insurance), QCDs, 72(t) schedules, or estate tax.
- The auto-plan is a greedy year-by-year fill, not a global optimum; compare it against manual shapes using the marginal-rate chart.
- IRMAA life-changing-event appeals (SSA-44) and first-year-Medicare lookback rules are not modeled.
- The first-year RMD deferral option (taking your first required distribution as late as April 1 of the following year, which doubles that year's income) is not modeled.
- Estimates for scenario planning only — not tax, legal, or investment advice.
Frequently asked questions
Why does my marginal rate on conversions exceed my tax bracket?
Because each conversion dollar can drag up to 85 cents of Social Security into taxable income. In the band between the first and second provisional-income thresholds, a 12%-bracket filer faces an effective 22.2% rate and a 22%-bracket filer up to 40.7% — the famous 'tax torpedo'. The marginal-rate chart shows exactly where your conversions enter and exit this band each year.
Do Roth conversions count toward IRMAA?
Yes. A traditional-to-Roth conversion is taxable ordinary income in the year you convert, so it lands in the MAGI that sets your Medicare surcharges two years later. Qualified Roth withdrawals, on the other hand, never count toward IRMAA — that asymmetry is precisely what makes well-timed conversions powerful.
How does the two-year IRMAA lookback work?
Your Medicare Part B and D premiums for any given year are set by your tax return from two years earlier — your 2026 MAGI determines your 2028 surcharges. The year table flags each year whose MAGI crosses a cliff and shows the dollar room left below the next threshold, so you can plan conversions that stop just short of a cliff you'd rather avoid.
When do my required minimum distributions start?
Under SECURE 2.0, RMDs begin at age 73 if you were born between 1951 and 1959, and at 75 if you were born in 1960 or later. The planner sets your start year automatically from your current age. RMDs are the reason the pre-RMD years are often the cheapest conversion window — after they begin, forced withdrawals can push you into higher brackets whether you converted or not.
What does the auto-plan actually optimize?
It's a greedy year-by-year fill: each year before your RMDs begin, it converts up to your chosen cap (just under the first IRMAA cliff, or the top of the 22%/24% bracket), measured against what your income would be with no conversion that year. It does not search every possible path — use the marginal-rate chart to spot years where a manual shape beats the automatic one.
Is this tax advice?
No. This is a scenario-estimation tool built on published federal rules — it excludes state taxes, ACA premium cliffs, QCDs, and estate tax, and it can't know your full situation. Treat the output as a starting point for a conversation with a qualified tax professional, not as a filing position.