Find your Tax Valley and model Roth-conversion headroom

If you have money in a Traditional 401(k) or Traditional IRA, you’ll eventually pay income tax on every dollar you withdraw. When you take it out matters as much as how much you have. There is often a window — a few years after you stop working and before Social Security + Required Minimum Distributions kick in — when your taxable income drops. That window is your Tax Valley, and it can be worth modeling before you decide whether any pre-tax retirement money should move into a Roth.

This walks you through finding your specific Tax Valley in GlidePath and seeing how Roth-conversion headroom changes the projected tax stack over your lifetime.

What you’ll learn

• What “Tax Valley” means in plain English (and why it’s a thing)
• How to find yours on the /Retirement page
• How much conversion room appears year by year before the next federal bracket (the bracket headroom)
• Why the valley is a window to evaluate Roth conversions before RMDs hit
• Why this matters even more if you’ll have significant RMDs (which start at 72, 73 or 75 depending on your birth year — 72 if you were born in 1950 or earlier, and for a couple the window closes on whichever of you reaches RMD age first)

Before you start

The panel renders whether or not you have a Traditional balance, so the real prerequisites are the inputs that decide whether its numbers mean anything. All three live on Plan Inputs:

• An annual spending target — without it the headroom runs on a placeholder and the confidence chip reads “rough”
• Birth dates (from Household & partners) — these set the RMD age, which is what closes the window
• A Social Security benefit at FRA — this drives the tax-torpedo adjustment folded into every headroom figure

Worth having as well: your accounts on the Accounts page, so the projection and net-worth snapshot are real — just don’t expect balances to change the headroom.

You don’t need perfect numbers. Tax Valley analysis is fundamentally about windows of opportunity, not point estimates — getting your situation 80% right is enough to know whether to keep reading or to call a CPA.

What’s a Tax Valley, in two paragraphs

Here’s the lifetime arc of taxable income for a typical retiree:

• Working years (your 30s-60s) — high taxable income from your salary, putting you in 22%, 24%, or 32% federal brackets
• Early retirement (your 60s) — paychecks stop. If you haven’t started Social Security yet and don’t have to take RMDs yet, your taxable income drops to maybe a small pension + a small amount of interest. You might be in the 10% or 12% bracket.
• Late retirement (mid-70s+) — Social Security + Required Minimum Distributions force taxable income back up. Often into the 22% or higher bracket again, sometimes higher than you ever were while working.

That dip in the middle is the Tax Valley. Dollars converted from Traditional to Roth during a lower-bracket year may face less federal tax pressure than dollars forced out later by RMDs. Same dollar, different year, potentially different tax stack.

Step 1 — Open the Tax Valley panel (1 min)

Open Retirement from the top nav — it’s under Plan — then click the Tax & Health tab. The first panel there is Tax valley & Roth conversion window.

Don’t go scrolling for it. /Retirement is tabbed, and panels on inactive tabs are hidden rather than further down the page — so no amount of scrolling from the default view will reveal it.

What you’ll find is not a chart. It’s four stat cards across the top — Valley years, 12% bracket headroom, 22% bracket headroom, and Est. tax difference at 12% — over a year-by-year table with these columns:

Age (J/J) · Phase · Pension · SS (taxable) · 401(k) draw · Taxable inc. · Bracket · Conv. at 12% · Conv. at 22%

That table is the valley: one row per year, each showing what your income looks like and how much room is left.

What defines the window is narrower than most descriptions suggest: it runs from the year you’re both retired through the year before the first RMD. Social Security doesn’t bound it at all. Years where you’re already collecting SS are still valley years — the Phase column labels them “Bridge — no SS”, “Partial SS” or “Both on SS” — they just have less room in them.

In the Retirement snapshot panel above the tabs, you may also get a plain-English summary reading “Your Tax Valley spans N years between retirement and RMDs (age NN), with $X of cumulative 22%-bracket room you could fill with Roth conversions.”

It’s triple-gated, and only appears when the opportunity is big enough to be worth naming: at least three valley years, more than $50,000 of cumulative 22% room, and balances and contributions present. If yours is shorter or tighter, the line simply doesn’t render — the panel and its table are still there and still correct. Nothing is broken. The year count is always on the Valley years stat card regardless.

Step 2 — Read the headroom (1 min)

Per-year headroom is the Conv. at 12% and Conv. at 22% columns — how much you could convert that year while staying under each bracket top. The cumulative figures are the two stat cards, and the table’s footer carries a Total headroom across window row.

This is not “bracket top minus taxable income.” That naive gap over-states the room, and GlidePath doesn’t use it. The figure is solved by bisection with the Social Security “tax torpedo” and the senior-deduction phase-out folded in — the panel says as much: “the real dollars that fit under the bracket top, not a naïve gap.” The two only agree in years before Social Security starts; once SS is flowing, the real number is materially smaller.

For a typical pre-retiree the headroom often lands somewhere around $30,000 to $80,000 a year — but that span is an illustration, not your number. It moves with filing status (a married-filing-jointly bracket is roughly twice as wide as a single one) and with whatever other income you already have. Use the figure in your own table.

If you have $400K in a Traditional 401(k) and 7 valley years, that’s $400K spread across 7 years = ~$57K/year. GlidePath shows whether that rough annual amount fits the modeled federal brackets before you and your preparer decide whether any conversion plan makes sense.

Step 3 — Decide how much to convert (and run it by a CPA)

GlidePath shows the valley and the headroom. It does not auto-plan your conversions — picking the amount is your call, and a good one to confirm with a tax pro.

Two effects people are usually told to worry about here are already inside the number, which is worth knowing so you don’t discount the headroom twice:

• The Social Security “tax torpedo” is folded into every year’s headroom by the bisection solve. The panel lists it under “What these numbers account for.”
• IRMAA appears inline: the tier-1 ceiling renders on the Conv. at 22% column as ”↓ $X before IRMAA”, so you can see where the Medicare surcharge starts biting.
• ACA subsidies are modelled too, in the ACA bridge panel directly below on the same tab — pre-65 premiums, the subsidy, and the 400% FPL cliff. The Tax Valley panel links to it. Read the two together before sizing a pre-65 conversion.

What is genuinely not modelled, per the app’s own list: state income tax, long-term capital-gains stacking, the conversion 5-year rules, and the fact that Social Security taxability thresholds aren’t inflation-indexed. NIIT is also outside it, deliberately — there’s no investment-income input.

So the workflow is: GlidePath solves the federal window including the torpedo and IRMAA; you and your preparer weigh what’s left.

Step 4 — Do the conversion at your brokerage, then re-check next year

A Roth conversion happens in your brokerage account (Fidelity, Schwab, Vanguard, etc.), not in GlidePath — you tell them to move $X from the Traditional IRA/401(k) into the Roth. You’ll owe ordinary income tax on the converted amount for that year, which is why the year-by-year tax stack matters.

Then update your balances in GlidePath — but be clear about what that does and doesn’t change. Converting does not redraw the valley. The engine never reads an account balance to compute headroom; the window and the room in it are driven by your spending target, pension, Social Security and ages. Updating balances keeps the projection and success probability honest, which matters, but the valley itself only moves if retirement age, claim age or spending target moves.

What just happened

You did three things most people never get around to:

1. Identified a potentially lower-tax window — a specific multi-year range when your taxable income may dip before RMDs and Social Security change the stack
2. Saw how much pre-tax money could fit during that window before the next federal bracket — often tens of thousands per year of bracket headroom
3. Got a concrete starting point for your CPA — “here’s the modeled window and roughly how much federal bracket room appears; what would it take to actually do this?”

This is the kind of retirement-tax modeling many basic budgeting tools never show. It is not a curiosity; it is a practical worksheet for a preparer conversation.

What this is not

• It’s not tax advice. GlidePath shows you bracket arithmetic and conversion windows. Whether to actually execute a conversion strategy depends on factors specific to your situation that you should walk through with a CPA or fee-only fiduciary advisor — IRMAA Medicare premium thresholds, state tax considerations, anticipated changes in tax law, your willingness to pay tax up front, and so on. See the tax disclaimer for the formal version.
• It’s not legal advice on Social Security claiming. The Tax Valley analysis assumes a specific Social Security claim age you’ve set on /Retirement; the claiming choice is a separate decision that depends on your earnings history, health, and spousal coordination.
• It’s not a guarantee. Tax law changes. Brackets get adjusted, sometimes dramatically. GlidePath uses the most recent IRS tables we have; if Congress reshapes the tax code, the conversion math may shift.

Ask Glide about this

Try: “Why can a Roth conversion look different before RMDs than after?” or “What’s the difference between a Roth conversion and a Roth contribution?” Glide will walk through both in plain English without seeing your actual numbers.

Where to next

• Track a balance transfer end-to-end — for the debt side of the planning conversation
• More planning tutorials coming — ACA bridge cost modeling, Social Security claim-age math, retirement Monte Carlo with sequence-of-returns risk