The US tax plan: Roth conversions, Social Security and your 401(k), together

The Zenarios tax plan now works for US households. It looks at your 401(k), IRAs, HSA, taxable investments, Roth conversions, home and Social Security together, tries combinations of changes on your own plan, and tells you what to change, by how much and when, and how much more you would have after taxes, at today’s prices. It recommends the strongest plan it tested, never “the optimal” one. It is a planning estimate, not tax advice.

Why US tax decisions don’t stand alone

“Should I convert to Roth?” and “When should I claim Social Security?” are usually asked one at a time. The answers depend on each other. Every dollar you convert raises your income for that year, which can shrink the 0% band for long-term gains, cost you the ACA premium credit before 65, push Medicare premiums up two years later through IRMAA, and make more of your Social Security taxable. Claiming Social Security later leaves more low-income years in which to convert. Larger conversions shrink the required distributions that start at 73 or 75. Cutting your 401(k) deferral to fund an IRA can lose part of the match.

The tax plan works inside your Zenarios plan, so all of this is already there: your pay, your accounts and their cost basis, your home, the month you stop working, your health cover and the benefits you will claim. Every combination it tries runs through the whole plan, year by year, rather than being estimated from a rule of thumb.

What it looks at

The US pack has thirteen strategies, plus one piece of paperwork. Each has a short list of what it needs, what to weigh and the next practical step.

Your W-4 and estimated payments appear as a to-do but are never ranked: they change when tax is paid, not how much. A large refund is money lent to the IRS; owing more than $1,000 at filing can cost an underpayment penalty unless you paid 100% of last year’s tax (110% above $150,000 of income).

The strategies, worked through

The figures below use 2026 federal rules and round numbers. Your own plan uses your state, your income in each year and the rules of each year, so its amounts will differ.

Roth conversions, the 0/15/20% bands, IRMAA and the ACA

Take a married couple who stop working at 62 with $1.2 million in traditional IRAs and 401(k)s and plan to claim Social Security at 70. For eight years their taxable income is low, and from 75 the required distributions will be large. In 2026 the 22% bracket for a joint return ends at $211,400 of taxable income, so with the $32,200 standard deduction they could convert up to about $243,600 a year at 22% or less.

Two lines can matter more than the bracket. Before 65 they buy marketplace health insurance, and the ACA premium credit ends at 400% of the poverty line: about $84,600 of income for a couple buying 2026 coverage. A dollar above it can cost thousands in credit. From 63, income counts for Medicare’s IRMAA two years later: on a joint return the first surcharge tier starts above $218,000 of income. So the tax plan tries conversions that fill the 12%, 22% or 24% bracket, and variants that stop just under the ACA line or the first IRMAA tier. Each runs in full with that year’s real income, so a year with a part-time job or a home sale converts less on its own.

Converted dollars also fill the 0% band for long-term gains first, because gains are stacked on top of ordinary income. A conversion can therefore turn tax-free gains into 15% gains in the same year. The tax is paid from taxable money the next April, and each conversion must stay five years before its withdrawal before 59½ is free of the 10% penalty.

Social Security claim ages

For someone born in 1960 or later, full retirement age is 67. Claiming at 62 pays 70% of the full benefit for life; waiting to 70 pays 124%. With a full benefit of $3,000 a month, that is $2,100 at 62 or $3,720 at 70, before yearly cost-of-living increases. For a couple the survivor keeps the larger of the two benefits, so the higher earner’s claim age also decides the widow’s or widower’s income.

The tax plan tries 62, full retirement age and 70 for each of you, and the combinations for a couple: both at full retirement age, the higher earner at 70 and the other at full retirement age or 62, both at 70. A later claim gives up years of payments and leaves more room for conversions, so its value depends on how long you live. That is why claim ages are tested against a longer and a shorter life: a change is recommended only if it still helps when the higher earner dies at 82. Claim ages are shown as a personal decision, and you can switch them off in Boundaries.

The 401(k) match, pre-tax or Roth

Say your employer matches 100% of the first 3% of pay and 50% of the next 2%. On $80,000 of pay, a 5% deferral of $4,000 brings $3,200 of employer money; a 3% deferral brings $2,400. The tax plan first closes that gap, then tries deferrals beyond the match: pre-tax, Roth and half and half, at the same cut in take-home pay and within the 2026 limit of $24,500, with more from 50 and at 60 to 63. A pre-tax dollar saves tax now and is taxed when drawn; a Roth dollar the reverse. Which wins depends on your rate now, your rate in retirement and the conversions that come in between, so the run decides.

Health savings account

With a qualifying high-deductible health plan, HSA contributions through payroll skip income tax and the 7.65% Social Security and Medicare tax, and withdrawals for medical costs are tax-free. The tax plan pays medical costs from cash while you work, so the account stays invested, and places the HSA last in the withdrawal order. California and New Jersey tax HSAs, and the plan follows them.

IRA and backdoor Roth

A traditional IRA is tried only where the contribution is deductible at your income; otherwise a Roth IRA below its income limit, at $7,500 a year in 2026 ($8,600 from 50). Above the limit, the backdoor Roth contributes to a nondeductible IRA and converts it at once. That is tax-free only while you hold no pre-tax IRA money: on 31 December the pro-rata rule counts all your traditional IRAs, so an old rollover IRA makes most of the conversion taxable. The tax plan marks the backdoor as not available then, and its checklist names both steps.

Gains in the 0% band, and losses

A retired couple living on $20,000 of interest and taxable savings uses the $32,200 standard deduction and still has room in the 0% band, which runs to $98,900 of taxable income on a joint return. They could realise about $111,100 of long-term gains that year at no federal tax, and buy the fund back at once, raising its cost basis for later. The tax plan does this each December with that year’s real income. Most states still tax the gain, and the extra income can reduce an ACA credit or raise IRMAA, which the run sees.

Losses work the other way: selling lots below their cost offsets gains and up to $3,000 of other income a year, with the rest carried forward. Buy a similar fund rather than the same one for 30 days, or the wash-sale rule disallows the loss.

Timing a home sale (§ 121)

A couple who bought and moved into a home in March 2025 and plan to sell in December 2026 have lived there 21 months. Selling in March 2027 instead, after two years, lets them exclude up to $500,000 of gain. On a $180,000 gain that is about $27,000 of federal tax at 15%, plus state tax and possibly the 3.8% net investment income tax. The tax plan only moves the sale within the window you allow.

How it works, step by step

Open it from the Scenarios tab under Taxes, from the tax details of your plan, or by asking “How can I pay less tax?”. It has five steps, the same as for German plans.

1. Review. This year’s federal and state income tax, payroll taxes and tax on investment income, the refund or balance due next April, which strategies may apply and which need a fact first.
2. Questions. Only the facts those strategies need: whether your employer offers a 401(k), its match tiers and whether it allows Roth deferrals; whether you have a qualifying high-deductible health plan; your pre-tax IRA balances and nondeductible basis; your full benefit and years of earnings from your Social Security statement; the cost basis of your investments; when you bought your home; whether you are married. If you don’t know, leave it: the strategy then shows as something to check first, with no amount.
3. Boundaries. The money a month it may use, a one-off amount from savings above your cushion, the cushion to keep, goals that must not come later, the decisions it may change (including claim ages) and the most changes you want.
4. Plan. Each strategy is tried on its own, the strongest are combined, their amounts are fine-tuned, and the result is checked in full and against harsher assumptions. It runs on your device, shows its progress and can be cancelled.
5. Follow through. Save the result as a scenario or adopt it, with Undo. The checklist carries the US deadlines: 31 December for conversions, gain and loss harvesting and payroll elections, 15 April for IRA contributions of the year before. The whole plan can be exported as a PDF.

How it compares plans

Plans are compared by what you would have after taxes at the end of the plan, through the younger adult’s 95th year, if everything were cashed in, at today’s prices. Unrealised gains count after their tax and tax-deferred accounts after the tax on paying them out over five years. Heirs would receive a step-up in basis, but the plan counts the tax as if you sold, so plans and countries compare alike.

Every retirement option for a person is tried at the same cost to you each month. A 401(k) or HSA deferral is sized so that your take-home pay drops by that amount; an IRA contribution so that it costs that amount after the April refund. Every contract that gains is then held against its twin: the same net money each month in an index fund in a taxable account, from the same month. It wins only by what the account adds through tax.

A change is suggested only when its tax part, the gain beyond simply investing the money, is at least $5,000 for something you open or sign (an IRA, a backdoor Roth, an HSA) or $1,000 when it takes only a form or an election, and when it still helps with returns one point lower and fees half a point higher. A claim-age change must also survive the higher earner dying at 82. Otherwise the tax plan tells you your plan is already in good shape, or that the result is too close to call, and keeps it as it is. The search caps how many projections it runs and uses no randomness, so the same plan gives the same answer.

The US tax rules underneath

A tax plan is only as good as the projection it runs on. US plans in Zenarios model:

• Federal brackets by filing status, including married filing separately; long-term gains and qualified dividends at 0, 15 or 20% stacked on ordinary income; short-term gains taxed as income, with purchase lots kept by month; the 3.8% net investment income tax; $3,000 of net loss against income, the rest carried forward.
• The standard or itemized deduction each year, whichever is larger: state and local taxes under the 2026 cap and its phase-down, mortgage interest, gifts above the 0.5% floor and medical costs above 7.5% of income; the senior deduction, tips, overtime and car loan interest; the child and dependent care credits; a simplified AMT.
• All 50 states and DC, with their own treatment of retirement income in 15 states, Washington’s capital gains tax and Massachusetts’ rate on short-term gains, plus New York City and local taxes.
• 401(k), Roth 401(k), traditional and Roth IRAs, HSAs, solo 401(k)s and SEP IRAs, with tiered matches, shared limits and catch-ups; the IRA deduction phase-out, nondeductible basis and the pro-rata rule; Roth withdrawals in their order (contributions, conversions, earnings); the 10% penalty before 59½ and the Rule of 55.
• Required minimum distributions from 73 or 75, by birth year, from each traditional account’s balance on the previous 31 December.
• Social Security from your earnings record, with claim ages from 62 to 70, spousal and survivor benefits, the earnings test and cost-of-living increases; Medicare premiums with IRMAA on income from two years earlier; the ACA premium tax credit before 65, with the 400% cliff, reconciled the next April.
• Rental property with depreciation, passive-loss limits and recapture at up to 25%; the home sale exclusion.
• Each year’s tax settled in April, as a refund or balance due, so a mid-year retirement or job change shows up as it would on a return.

What it doesn’t do

The US tax plan works for plans in dollars with calculated US taxes. It does not yet test after-tax 401(k) money and in-plan conversions (the mega backdoor), leaving a job at 55 to use the Rule of 55, moving income between years, the dependent care FSA, bunching gifts into a donor-advised fund, self-employed plans or 529 accounts. The Roth catch-up rule for earners above $150,000, vesting schedules and the choice of which unmarried parent claims a child are not modelled.

It leaves out estate and gift tax, stock options and RSUs, business structures, moving states as a recommendation, US citizens abroad and treaties. It does not choose your retirement date, and it does not file your return, open an account or move money.

The federal and state figures were checked against IRS, SSA and state sources in October 2026. The result is what the numbers suggest under the plan’s assumptions, not tax advice: check the details with a CPA or enrolled agent before you act. The methodology describes the tax models, and the feature reference keeps the current scope. The German and UK tax plans work the same way with their own strategies.

Sources for the rules quoted here: IRS 2026 retirement limits, Publication 590-A (IRAs), Publication 969 (HSAs), Topic 409 (capital gains), IRA FAQs (conversions), Topic 701 (home sales), SSA (claim ages). Figures for 2026.

The tax plan is part of Zenarios for every US plan, with no extra setup. Try it in the web app, which is free and needs no account. To see how it differs from US planners, read Zenarios vs Boldin and Zenarios vs ProjectionLab.

Common questions

Does Zenarios plan Roth conversions?

Yes, for US plans with calculated taxes. The tax plan tests a yearly conversion rule from your first year without pay until required distributions start: fill the 12%, 22% or 24% bracket, or stop just under the first IRMAA tier or the ACA line. Each variant runs through your whole plan with that year's real income. It is a planning estimate, not tax advice.

Does it tell me when to claim Social Security?

It tries 62, full retirement age and 70 for each of you, and the usual combinations for a couple, with spousal and survivor benefits. A later claim is recommended only if it still helps when the higher earner dies at 82. Claim ages are shown as a personal decision, and you can switch them off.

What does the US tax plan not cover yet?

After-tax 401(k) money (the mega backdoor), the Rule of 55 as a strategy, moving income between years, the dependent care FSA, bunching gifts, self-employed plans and 529 accounts. Estate and gift tax, stock options and US citizens abroad are outside the model.

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A Zenarios guide. These guides explain planning concepts and the product; they are not a personalized financial recommendation. Illustrative calculations are not results from your plan.