Roth IRA Conversion Calculator

Determine if converting a traditional IRA to a Roth IRA is the right move for your retirement plan. This calculator analyzes the upfront tax cost of a conversion against the long-term benefits of tax-free growth and withdrawals. Simply enter your account balance, age, and estimated tax rates to see a side-by-side comparison of your potential retirement wealth.

This tool is designed for anyone with a pre-tax retirement account, such as a traditional IRA, 401(k), or 403(b), who is considering whether to pay taxes now for a tax-free future. Understanding the difference between a Roth vs. Traditional IRA is the first step. This calculator helps with the next one: the math behind a conversion. It can also be a key tool for managing future Required Minimum Distributions (RMDs).

The results provide a clear "Conversion Benefit Score," your estimated tax bill, the projected value of your Roth IRA at retirement, your long-term tax savings, and a break-even age where the conversion pays for itself. A detailed chart visualizes how your money grows in both scenarios—converting versus not converting—helping you make a more informed decision.

Begin by entering your Conversion Details. The "Conversion Amount" is how much you plan to move from your traditional IRA to a Roth IRA. The "Current Traditional IRA Balance" is the total value of all your pre-tax IRA assets.

Next, provide your Personal Details. Your "Current Age" and planned "Retirement Age" establish the time horizon for your investment to grow. A longer timeline generally makes a Roth conversion more attractive, as it provides more years for tax-free compounding.

Then, input your estimated Tax Rates. Your "Current Federal Tax Bracket" is your marginal rate today, which determines the immediate tax cost of the conversion. The "Expected Retirement Tax Bracket" is your best guess for your tax rate after you stop working. This is a critical assumption, as conversions are most powerful when you expect to be in a higher tax bracket in retirement. Finally, add your "Expected Annual Return" to project how your investments will grow over time.

For a more detailed analysis, open the Advanced Settings. Here you can add your "State Tax Rate," which is added to your federal rate to calculate the total tax bill. You can also specify whether you will "Pay Tax from Outside Funds"—using cash from a savings or brokerage account is usually more efficient. The "Annual Conversion Amount" field allows you to model a multi-year conversion strategy, which can help you avoid being pushed into a higher tax bracket in a single year.

Conversion Amount

This is the specific dollar amount you are thinking of converting from your traditional, pre-tax retirement account into a Roth IRA. This entire amount will be added to your taxable income for the current year.

Current Traditional IRA Balance

Enter the total combined value of all your traditional, SEP, and SIMPLE IRAs. The IRS pro-rata rule requires that any conversion is taxed based on the ratio of your pre-tax and after-tax money across all your IRAs, so it's important to use the total balance.

Current Age and Retirement Age

Your age and planned retirement age determine your time horizon. The more years your converted funds have to grow, the more valuable the tax-free growth becomes. A longer time horizon gives you more time to overcome the initial tax cost of the conversion.

Current and Retirement Tax Brackets

These are the most critical inputs for the calculation. A Roth conversion is essentially a bet on your future tax rate. If you believe your tax rate in retirement will be higher than your rate today, a conversion may save you money long-term. If you expect your retirement tax rate to be lower, keeping the funds in a traditional IRA might be better. Consider how future RMDs from a large traditional IRA could increase your retirement income and push you into a higher bracket.

Expected Annual Return

This is the average annual rate of return you anticipate for your investments. A higher return magnifies the benefit of tax-free growth inside a Roth IRA, making a conversion more appealing. Be realistic with this assumption; overly optimistic returns can skew the results.

State Tax Rate

Your state income tax rate is added to your federal rate to determine the total tax liability of the conversion. This is a crucial and often overlooked cost. If you plan to retire in a state with no income tax, converting while living in a high-tax state might be less advantageous. See the best states to retire for taxes for more information.

Pay Tax from Outside Funds

This input asks where the money to pay the conversion tax will come from. "1" means you will pay the tax from a separate non-retirement account (like a checking or brokerage account). "0" means the tax will be paid from the converted amount itself. Paying from outside funds is almost always better, as it allows the full conversion amount to grow tax-free.

Annual Conversion Amount

This field is for modeling a "Roth conversion ladder" strategy. Instead of converting a large sum in one year, you can convert smaller amounts over several years. This can prevent the conversion from pushing you into a significantly higher tax bracket. Our guide to the Roth conversion ladder explains this in more detail.

The calculator's methodology is based on a direct comparison of two financial paths: one where you convert to a Roth IRA, and one where you do not.

Scenario 1: Convert to Roth IRA First, the calculator determines the immediate tax cost of the conversion by multiplying the "Conversion Amount" by your combined federal and state tax rates. If you choose to pay taxes from the converted funds, this tax amount is subtracted, and only the net amount is moved to the Roth IRA. If you pay from outside funds, the full conversion amount is moved. The calculator then projects the growth of this new Roth balance and any remaining traditional IRA balance year by year until your retirement age, using your expected rate of return.

Scenario 2: Keep Traditional IRA In this scenario, no conversion occurs. The calculator projects the growth of your entire "Current Traditional IRA Balance" year by year until retirement, using the same expected rate of return.

The Comparison The calculator then compares the future value of these two scenarios. Crucially, it evaluates the after-tax value. The Roth IRA balance is worth its full amount because withdrawals are tax-free. The traditional IRA balance, however, is reduced by your "Expected Retirement Tax Bracket" to reflect the taxes you will owe on withdrawals. The "Conversion Benefit" is the difference between the after-tax value of the two scenarios at retirement. The "Break-Even Age" is the point where the growing, tax-free Roth account's value overtakes the after-tax value of the traditional account.

The calculator uses a year-by-year projection to model growth. The core formulas for the initial calculation and final comparison are shown below.

Tax Cost Formula

This formula calculates the immediate tax bill you would owe on the conversion.

total current tax rate = (current federal tax bracket + state tax rate) / 100
tax cost of conversion = conversion amount x total current tax rate

Initial Balances for Projection

The starting amounts for the two scenarios depend on how you choose to pay the taxes.

// If paying tax from non-retirement funds:
initial Roth balance = conversion amount
remaining traditional balance = traditional IRA balance - conversion amount

// If paying tax from the converted amount:
initial Roth balance = conversion amount - tax cost of conversion
remaining traditional balance = traditional IRA balance - conversion amount

Annual Growth Formula

For each year between your current age and retirement age, both scenarios grow based on your expected return.

next year balance = current year balance x (1 + (expected return / 100))

Conversion Benefit Formula

This formula compares the final after-tax values of both scenarios at retirement to determine the net benefit of converting.

total retirement tax rate = (retirement federal tax bracket + state tax rate) / 100
projected traditional balance after tax = projected traditional balance x (1 - total retirement tax rate)
conversion benefit = projected Roth balance - projected traditional balance after tax

A Roth IRA conversion can be a powerful tax-planning strategy, but it's not right for everyone. The decision hinges on a few key factors.

The most important factor is your current versus future expected tax rate. The fundamental trade-off is paying taxes now to avoid them later. If you are in a low-income year (due to a job change, sabbatical, or starting a business) and expect your income and tax bracket to be higher in retirement, a conversion is often beneficial. Conversely, if you are at your peak earning years and expect a much lower tax bracket in retirement, it may be better to defer taxes with a traditional IRA.

Your time horizon also matters. The longer your money has to grow after the conversion, the more valuable the tax-free growth becomes. A 40-year-old has more time to recoup the tax cost through compounding than a 60-year-old.

Finally, consider your ability to pay the conversion tax with non-retirement funds. Using money from the conversion itself to pay the tax reduces the amount that gets invested in the Roth, diminishing the long-term benefit. If you don't have cash on hand to pay the tax bill, you may want to reconsider the timing or amount of the conversion.

The Roth conversion ladder is a strategy used primarily by those seeking to retire early to access retirement funds before age 59½ without penalty. It involves systematically converting pre-tax traditional IRA or 401(k) funds into a Roth IRA over several years.

Here's how it works: each year, you convert a portion of your traditional IRA to a Roth IRA and pay income tax on that amount. After a 5-year waiting period for each conversion, the converted principal can be withdrawn from the Roth IRA tax-free and penalty-free, regardless of your age.

By converting an amount equal to your annual living expenses each year, you can build a "ladder" of funds that become accessible five years later. For example, the funds you convert in 2026 become available in 2031, funds from 2027 become available in 2032, and so on. This provides a steady stream of tax-free income in early retirement. Our guide to the Roth conversion ladder provides a step-by-step example.

A Roth conversion is not a contribution; it is a taxable event. The amount you convert is added to your adjusted gross income (AGI) for the year. This can have several ripple effects on your finances.

First, the additional income could push you into a higher federal income tax bracket, increasing the tax rate not just on the conversion but on your other income as well. It can also trigger or increase the Net Investment Income Tax (NIIT).

Second, a higher AGI can affect your eligibility for certain tax credits and deductions, such as the child tax credit or student loan interest deduction.

Third, it can impact your Medicare premiums in retirement. Medicare Part B and Part D premiums are subject to the Income-Related Monthly Adjustment Amount (IRMAA). A large Roth conversion can increase your AGI enough to trigger higher premiums two years later.

Finally, a higher AGI could make more of your Social Security benefits taxable in retirement if you convert after you've started collecting. It's crucial to plan conversions carefully, often by spreading them over multiple years to manage the tax impact.

Conversion Benefit Score: This score gives you a quick summary of the calculator's findings. A high score (e.g., 80+) suggests a strong case for converting based on your inputs, while a lower score indicates it may not be advantageous.

Tax Cost of Conversion: This is the estimated, immediate tax bill you will owe on the converted amount. It's the upfront price for future tax-free benefits.

Projected Roth Balance: This shows the estimated value of your converted funds at your planned retirement age, assuming your expected rate of return. This entire balance would be available for tax-free withdrawals in retirement.

Tax Savings in Retirement: This figure estimates the total taxes you could avoid over a 30-year retirement by having tax-free Roth withdrawals instead of taxable traditional IRA withdrawals.

Break-Even Age: This is a critical metric. It’s the age at which the cumulative benefit of tax-free growth in the Roth account surpasses the initial tax cost, making the conversion profitable. A break-even age that occurs well before your life expectancy is a positive sign.

Convert vs. Don't Convert Chart: This visual tool plots the projected growth of your money in both scenarios. You can see how the "Keep Traditional" line starts higher (since no tax was paid), but the "Convert to Roth" line may catch up and surpass it over time due to tax-free compounding.

If the results suggest a conversion is a good idea, you can optimize the strategy further.

1. Convert in a Low-Income Year: The best time to convert is when your taxable income is temporarily lower. This could be a year between jobs, after retiring but before taking Social Security, or during a sabbatical.
2. Use a Multi-Year Strategy: Instead of a single large conversion that pushes you into a high tax bracket, consider converting smaller amounts over several years. This is known as "filling up" lower tax brackets. You can model this with the "Annual Conversion Amount" input.
3. Pay Taxes from a Non-Retirement Account: Always aim to pay the conversion tax from a taxable brokerage or savings account. This keeps your retirement funds fully invested and compounding, maximizing the long-term benefit.
4. Coordinate with State Taxes: If you plan to move from a high-tax state to a no-tax state like Florida or Texas in retirement, it might be better to wait and convert after you move. Conversely, if you're moving from a low-tax to a high-tax state, convert before you go.

1. Forgetting State Taxes: Many people only focus on the federal tax impact, but state taxes can add a significant cost to the conversion.
2. Ignoring the Pro-Rata Rule: If you have any after-tax (non-deductible) contributions in any of your traditional IRAs, you cannot simply convert only the pre-tax money. The conversion will be a mix of taxable and non-taxable funds, which can complicate things.
3. Paying Taxes from the IRA: As mentioned, this reduces the amount that goes into the Roth and can trigger a 10% early withdrawal penalty on the portion used for taxes if you are under 59½.
4. Not Planning for RMDs: A key benefit of a Roth conversion is reducing your future traditional IRA balance, which in turn reduces your future Required Minimum Distributions (RMDs). Failing to factor this into your decision means understating a major advantage of converting. Use the RMD Calculator to see your potential future liability.
5. Misunderstanding the 5-Year Rules: There are two 5-year rules associated with Roth IRAs that can affect conversions. One applies to earnings, and one applies to the converted principal for penalty-free withdrawals before age 59½.