re: Basic math of Roth vs Traditional many get wrong

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Correct. There is a strategy for this. You really need three different retirement vehicles to draw from. I realize for a lot of folks this isn’t an option but if you have a 401k, Roth, and HSA for example you are going to be able to have a huge advantage when it comes to to withdrawal strategies.

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Don't forget taxable account and 0% capital gain tax rate.

A single person with no regular income with $65k in capital gains & std deduction would pay 0% in taxes. A MFJ couple would pay no tax on $131k of capital gains.

I like this this site which lets you see how taxes between income & capital gains affect each other:

https://engaging-data.com/tax-brackets/

I don’t think anyone was argue basic math. Some of us argue your assumptions.

You mentioned IRMAA, that’s a big part of the reason people convert.

Another is not needing their RMD (Roth does not have an RMD)

Another is future tax rates - for many… they will not be at 12.

There are also legacy and estate tax issues. If someone is going to be subject to estate tax, it makes sense to pay the tax on distribution before imposition of the estate tax. And remember some states start estate taxes at relatively low threshold and without portability,

Plus state tax issues. What if I’m working in Nevada but plan to retire in Cali to be close to the grandkids?

I discuss conversions 3-4 times a week with clients. 99 percent of them have $1M plus in trad IRA / 401k money. I always tell them, if anyone tells you everyone should convert, and if anyone tells you no one should convert, ignore both, every situation is fact dependent.

Also effective tax rate is a garbage stat. Why? Because for most people, the lower rates will get eaten up with SS benefits, pension, passive income sources, etc, it’s even worse if you are widowed. Almost all of my clients project to be at 22 or higher before any Ira distributions. Who cares what their effective rate is? What rate am I gonna pay if I take one more dollar of income. That’s what matters.

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Thanks for sharing, this visualizer is great.

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Yeah I bookmarked it the first time I saw it as it's really useful.

Fyi if you didn't notice, there are two chart options. It defaults to the block one but I much prefer the flow one; just click on the Flows tab to switch.

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This is why I contribute 100% of my 401k traditional and supplement with 2 Roth IRAs and cash.

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Just retired last year. While I had my SCorp I would max my i401k and then max Roth. Always i401k first for the pre-tax treatment. Nearly all years I could max my Roth other than a couple where we were over the limits. This is the first year of us doing Roth conversions. Will be doing a mix of that and LTCG for a while.

Agree with this. The variables make it difficult to have a one size fits all approach. Having diversity in how income is taxed is a good option for the future. The length of time that earnings can grow is a high criteria in these decisions. Most can earn sizeable profits given enough time to earn it. This makes Roth a good option to have for many. Focusing on Roth earlier in one's financial journey and traditional later seems logical. Having both, as well as hsa, is a good model for most.

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The length of time that earnings can grow is a high criteria in these decisions

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Again, this misconception is why I shared the video. Time is a constant in the Roth vs Traditional choice. Length of compounding doesn't change the math (assuming you have same investment duration & growth rate whether you choose to go Roth or Trad).

Eta: of course timeline of withdrawal has effect on complexities such as RMD, widow penalty, inheritance etc

Being marginally in a top bracket now, I just cannot rationalize to myself to do Roth at this time.

I wish I understood this a little more. I am a reasonably bright individual but the world of finance is a foreign language to me. I was a late starter to beginning retirement contributions due to putting myself through school with a young family. I have been able to max out both a 401k and 457b now for 8 years. Began looking at supplemental additional funds for investment and am reading more about the topic here. Ultimately I may just need to hire a finance person to give me advice.

More detailed step by step process

I think a rollover traditional IRA counts as a traditional IRA. Never heard of an exception for that.

But as the graphic mentions (step 3 of graphic) you may be able to roll it into your 401k or just bite the bullet and pay tax on converting it to Roth to clean things up and make backdoor Roths easy moving forward.