Roth Conversion Calculator
Calculate the tax impact and long-term benefits of converting traditional IRA or 401(k) to Roth IRA.
Traditional Account Details
Tax Information
Tax Cost of Conversion
Converting $25,000 will push your income into the 22% marginal bracket.
Net Benefit After 20 Years
+$15,728
Conversion May Be Beneficial
Based on your inputs, converting $25,000 could result in a net benefit of $15,728 after 20 years. You would break even at year 1 (age 46).
Important Considerations
- - The conversion amount is added to your taxable income for the year
- - Pay taxes from non-retirement funds to maximize the benefit
- - Roth conversions are subject to the 5-year rule before tax-free withdrawal
- - Consider spreading large conversions over multiple years to stay in lower brackets
- - State tax treatment varies - some states do not tax Roth conversions
- - Consult a tax professional before making significant conversions
Related Calculators
About This Calculator
A Roth conversion is one of the most powerful tax planning strategies available to retirement savers. By converting funds from a traditional IRA or 401(k) to a Roth IRA, you pay taxes on the converted amount today in exchange for tax-free growth and withdrawals in the future. This strategy can save you tens or even hundreds of thousands of dollars in lifetime taxes when executed properly.
The Roth Conversion Calculator helps you analyze whether converting makes sense for your situation. It calculates the immediate tax cost of conversion, projects the long-term growth of both scenarios (with and without conversion), determines your break-even point, and shows you the potential net benefit over time. The key factors include your current tax bracket versus your expected retirement tax bracket, how long your money can grow tax-free, and whether you have funds outside retirement accounts to pay the conversion taxes.
When Roth Conversions Make the Most Sense:
Converting typically benefits you when:
- Your current tax rate is lower than your expected retirement rate
- You have many years for tax-free growth to compound
- You can pay the conversion taxes from non-retirement funds
- You want to reduce Required Minimum Distributions (RMDs)
- You want to leave tax-free money to heirs
The 2017 Tax Cuts and Jobs Act created historically low tax rates through 2025, making this a potential golden window for Roth conversions. Many financial advisors recommend accelerating conversions before rates potentially increase. However, timing a conversion requires careful analysis of your complete tax picture, which is exactly what this calculator helps you evaluate.
Whether you are considering a full conversion of your traditional accounts, a partial conversion to fill up a lower tax bracket, or planning a multi-year Roth conversion ladder for early retirement, this calculator provides the analysis you need. For comprehensive retirement planning, also explore our 401k Calculator and Retirement Calculator.
How to Use the Roth Conversion Calculator
- 1Enter your current traditional IRA or 401(k) balance that you are considering for conversion.
- 2Specify the conversion amount - you can convert all or just a portion. Use the "Full Conversion" button to quickly select the entire balance.
- 3Input your current age and planned retirement age to establish your time horizon.
- 4Enter your current taxable income (before the conversion) and select your tax filing status.
- 5Set your current marginal tax rate, expected retirement tax rate, and state income tax rate.
- 6Adjust the expected annual investment return (7% is a typical long-term assumption) and years until you plan to withdraw.
- 7Review the tax cost breakdown showing federal and state taxes due on the conversion.
- 8Analyze the break-even point and long-term comparison to determine if conversion benefits you.
How Roth Conversions Work
A Roth conversion involves moving money from a pre-tax retirement account (traditional IRA, 401(k), 403(b), etc.) to a Roth IRA. The converted amount becomes taxable income in the year of conversion, but all future growth and qualified withdrawals are completely tax-free.
The Basic Mechanics
| Step | What Happens | Tax Impact |
|---|---|---|
| 1. Convert | Move funds from traditional to Roth | Converted amount added to taxable income |
| 2. Pay Tax | Tax due on conversion amount | Owed by April 15 (or with estimated payments) |
| 3. Grow | Investment grows in Roth account | No tax on growth |
| 4. Withdraw | Take money out in retirement | 100% tax-free (if qualified) |
Qualified vs. Non-Qualified Withdrawals
For tax-free withdrawal of earnings, you must meet two requirements:
- 5-Year Rule: At least 5 years since your first Roth contribution or conversion
- Age Requirement: Age 59 1/2 or older (or other qualifying exception)
Your original converted amount (the basis) can always be withdrawn tax-free and penalty-free, even before age 59 1/2. Only the earnings have restrictions.
Key Differences from Traditional
| Feature | Traditional IRA/401(k) | Roth IRA |
|---|---|---|
| Tax on Contributions | Deductible (pre-tax) | After-tax |
| Tax on Growth | Tax-deferred | Tax-free |
| Tax on Withdrawals | Fully taxed as income | Tax-free (if qualified) |
| Required Minimum Distributions | Yes, starting at 73 | None during your lifetime |
| Estate Planning | Heirs pay income tax | Heirs receive tax-free |
Tax Implications of Roth Conversions
Understanding the tax implications is crucial for making smart conversion decisions. The converted amount is added to your ordinary income for the year, potentially pushing you into a higher tax bracket.
How Conversions Affect Your Tax Bracket
Example for Married Filing Jointly (2025 brackets):
| If Your Income Is | And You Convert | Total Income | Marginal Rate |
|---|---|---|---|
| $90,000 | $10,000 | $100,000 | 12% on all |
| $90,000 | $25,000 | $115,000 | 22% on portion |
| $90,000 | $125,000 | $215,000 | 24% on portion |
Strategic Bracket Filling
One of the most effective strategies is "filling up" a tax bracket without spilling into the next one.
Example: If you are married filing jointly with $90,000 taxable income, you are in the 12% bracket (which ends at $96,950). You could convert $6,950 and pay only 12% tax on the entire conversion.
Tax-Efficient Conversion Strategies
- Annual Bracket Filling: Convert just enough each year to stay within your current bracket
- Low-Income Year Conversion: Convert more during sabbaticals, early retirement, or between jobs
- Market Downturn Conversion: Convert when portfolio values are down to convert more shares for less tax
- Pre-RMD Conversion: Convert aggressively in years 65-72 before Required Minimum Distributions begin
Additional Tax Considerations
- IRMAA: Large conversions can trigger Medicare premium surcharges two years later
- ACA Subsidies: Conversions increase MAGI, potentially reducing health insurance subsidies
- State Taxes: Some states do not tax Roth conversions; others fully tax them
- Net Investment Income Tax: 3.8% tax on investment income if MAGI exceeds thresholds
When Roth Conversion Makes Sense
Not every conversion is beneficial. The decision depends on comparing your current tax situation with your expected future situation.
Factors Favoring Conversion
| Factor | Why It Helps |
|---|---|
| Lower current tax bracket | Pay less tax now than you would later |
| Long time horizon | More years for tax-free growth to compound |
| Rising future tax rates | Lock in current lower rates |
| Large traditional balances | Reduce future RMDs |
| Cash to pay taxes | Avoid using retirement funds for taxes |
| Estate planning goals | Leave tax-free inheritance |
| State tax planning | Convert before moving to high-tax state |
Factors Against Conversion
| Factor | Why It Hurts |
|---|---|
| Higher current bracket | Paying more tax now than necessary |
| Short time horizon | Not enough time to recoup tax cost |
| No cash for taxes | Using retirement funds reduces benefit |
| Need funds soon | 5-year rule may trigger penalties |
| High current income | Conversion triggers additional taxes |
| Already in low retirement bracket | May pay less later anyway |
The Break-Even Analysis
The break-even point is when the tax-free growth in the Roth equals the tax cost of conversion. Key factors affecting break-even:
- Higher tax paid now = Longer break-even
- Higher investment returns = Shorter break-even
- Lower future tax rate = Longer break-even
Typical break-even periods range from 5-15 years. If you have at least that many years before withdrawal, conversion often makes sense.
Roth Conversion Ladder for Early Retirement
The Roth conversion ladder is a powerful strategy that allows early retirees to access traditional retirement funds before age 59 1/2 without penalties. It is a cornerstone of the FIRE (Financial Independence, Retire Early) movement.
How the Ladder Works
- Retire early with funds in traditional 401(k)/IRA plus taxable accounts or Roth contributions
- Each year, convert a portion of traditional to Roth (taxable income, but use standard deduction)
- Wait 5 years for each conversion to become penalty-free
- Withdraw from converted funds after 5 years, penalty and tax-free
- Live on taxable accounts, Roth contributions, or other income during the 5-year waiting period
Example Ladder
| Year | Action | What Becomes Available |
|---|---|---|
| 2026 | Convert $50,000 | Nothing yet |
| 2027 | Convert $50,000 | Nothing yet |
| 2028 | Convert $50,000 | Nothing yet |
| 2029 | Convert $50,000 | Nothing yet |
| 2030 | Convert $50,000 | Nothing yet |
| 2031 | Convert $50,000 | 2026 conversion ($50k) available |
| 2032 | Convert $50,000 | 2027 conversion ($50k) available |
Tax Efficiency
If your only income is the conversion, you may pay very little or no tax:
- Standard deduction (2025): $30,000 for married filing jointly
- 10% bracket: $0-$23,850
- 12% bracket: $23,850-$96,950
A married couple could convert ~$126,950 and pay only 10-12% tax on most of it.
Bridge Strategies
During the 5-year waiting period, fund living expenses from:
- Taxable brokerage accounts
- Roth IRA contributions (always available tax and penalty-free)
- Part-time work
- 72(t) SEPP distributions (complex, requires careful planning)
Backdoor Roth Strategies
High earners who exceed Roth IRA income limits can still get money into Roth accounts through "backdoor" strategies. These are legal workarounds that have been used for years.
The Basic Backdoor Roth IRA
For those above Roth IRA income limits ($161,000 single, $240,000 married in 2025):
- Contribute to a non-deductible traditional IRA ($7,000 or $8,000 if 50+)
- Convert immediately to Roth IRA
- Pay tax only on gains (minimal if converted quickly)
Warning: The Pro-Rata Rule
If you have existing pre-tax traditional IRA funds, the conversion is taxed proportionally. Example:
- You have $93,000 pre-tax in traditional IRA
- You contribute $7,000 non-deductible
- Total IRA balance: $100,000 (7% non-deductible)
- If you convert $7,000, only 7% ($490) is tax-free
- The other $6,510 is taxable
Solution: Roll existing traditional IRA into a 401(k) before doing backdoor Roth.
The Mega Backdoor Roth
For those with 401(k) plans that allow it:
- Max out regular 401(k) contribution ($23,500)
- Make after-tax contributions to 401(k) (up to $70,000 total limit)
- Convert after-tax contributions to Roth
- Potential additional Roth: $46,500/year
Not all plans allow this - check with your HR or plan administrator.
Build Back Better Concerns
As of 2025, backdoor Roth strategies remain legal, but Congress has proposed eliminating them. Consider:
- Taking advantage while strategies are still available
- Consulting a tax professional for personalized advice
- Staying informed about legislative changes
The Pro-Rata Rule Explained
The pro-rata rule is one of the most misunderstood aspects of Roth conversions. It prevents you from selectively converting only the non-taxable (after-tax) portion of your IRA.
How the Pro-Rata Rule Works
The IRS views all your traditional IRA accounts as one pool for conversion purposes. If that pool contains both pre-tax and after-tax (non-deductible) contributions, any conversion is taxed proportionally.
Calculation Example
Your total traditional IRA holdings:
- Pre-tax contributions and earnings: $180,000
- Non-deductible contributions (after-tax): $20,000
- Total IRA balance: $200,000
Percentage non-deductible: $20,000 / $200,000 = 10%
If you convert $50,000:
- Tax-free portion: $50,000 x 10% = $5,000
- Taxable portion: $50,000 x 90% = $45,000
You cannot convert just the $20,000 non-deductible portion tax-free.
What Accounts Count for Pro-Rata
Included:
- Traditional IRA
- SEP IRA
- SIMPLE IRA (after 2-year holding period)
- Rollover IRA
Not Included:
- 401(k) (active or old)
- 403(b)
- Roth IRA
- Inherited IRA
Strategies to Avoid Pro-Rata Problems
- Reverse Rollover: Move traditional IRA funds into your 401(k) before conversion
- Full Conversion: Convert entire IRA balance (all at once or over time)
- Keep IRAs Clean: Avoid non-deductible contributions if you have large pre-tax balances
- Separate Accounts: Keep SEP-IRA or SIMPLE IRA at different institutions (still counted, but easier to track)
Tracking Non-Deductible Contributions
Use IRS Form 8606 to track:
- Non-deductible traditional IRA contributions
- Basis for Roth conversions
- Pro-rata calculation for partial conversions
Keep records indefinitely - you will need them to prove which portion is tax-free.
Pro Tips
- 💡Convert in lower-income years (job loss, sabbatical, early retirement) when your tax bracket is temporarily low.
- 💡Fill up your current tax bracket without spilling into the next one for maximum efficiency.
- 💡Pay conversion taxes from non-retirement funds to maximize the amount growing tax-free.
- 💡Consider converting when the market is down - you will move more shares for less tax.
- 💡Use the years between retirement and age 73 (RMD age) for aggressive conversion while income is low.
- 💡Track your non-deductible IRA contributions carefully using Form 8606 to avoid paying tax twice.
- 💡If doing backdoor Roth, check for existing pre-tax IRA balances that trigger the pro-rata rule.
- 💡Consider the Medicare IRMAA cliff - large conversions two years before Medicare enrollment can increase premiums.
- 💡Spread large conversions over multiple years to avoid bracket creep and other income-based phase-outs.
- 💡Review your estate plan - Roth assets can be more valuable to heirs than traditional assets.
- 💡Do not forget state taxes - conversion in a no-income-tax state saves an additional 5-13%.
- 💡Wait until after January 1 to convert so you have the full year to decide on amount.
- 💡Keep some traditional assets for tax diversification - you may want both tax-free and deductible options in retirement.
- 💡Calculate the impact on ACA health insurance subsidies if you are on marketplace insurance.
- 💡Consider a Roth conversion ladder if planning early retirement before 59 1/2.
Frequently Asked Questions
A Roth contribution is new money you deposit directly into a Roth IRA (subject to income limits and annual contribution limits of $7,000/$8,000). A Roth conversion is moving existing money from a traditional IRA or 401(k) into a Roth IRA. There are no income limits on conversions, and you can convert any amount. However, the converted amount is added to your taxable income for the year. Contributions require earned income; conversions do not.
