RETIREMENT SAVINGS
A Roth conversion moves money from a traditional IRA into a Roth IRA. You pay income tax on the converted amount now, and in return it can grow and be withdrawn tax-free in retirement. This calculator estimates the tax due on the conversion today and compares what the same money could be worth at retirement as a Roth versus leaving it in your traditional IRA.
Roth conversion estimator
The conversion amount was capped at your IRA balance.
This calculator assumes the conversion tax is paid from money outside the IRA, so the full converted amount moves into the Roth and keeps growing tax-free. Results are estimates for educational purposes only and are not tax advice.
Say your traditional IRA balance is $200,000 and you convert $50,000 of it this year. Your current marginal tax rate is 22%, you expect to pay 24% in retirement, you have 15 years until retirement, and you expect a 6% annual return.
The tax due on the conversion now is $11,000. The calculator assumes you pay that from money outside the IRA, so the full $50,000 moves into the Roth and keeps growing.
At 6% for 15 years, the converted amount grows to $119,828 by retirement. In the Roth, that whole amount is yours to spend, tax-free. Left in the traditional IRA, the same $50,000 grows to the same $119,828 before tax, but after retirement tax at 24% you keep $91,069. Converting leaves you with $28,759 more spendable money at retirement, and your remaining traditional IRA balance today is $150,000, ready for a later conversion if it still makes sense. Flip the two tax rates around, with 24% now and 22% in retirement, and staying put wins instead. The rate gap decides it.
The Internal Revenue Service explains the rules for converting traditional IRA money to a Roth IRA.
When you convert, the amount you move is added to your taxable income for the year and taxed at your ordinary income tax rate, just like wages. That is why your current marginal rate drives the cost of the conversion: the calculator multiplies your conversion amount by that rate to show the tax bill you would owe now.
Each conversion also starts its own five-year clock. If you withdraw converted money within five years of the conversion and you are under 59½, a 10% early-withdrawal penalty can apply, even though the income tax itself was already paid at conversion. Once you are 59½ and the five-year period has passed, qualified withdrawals of contributions and earnings are completely tax-free.
The final comparison comes down to your two tax rates. Your current rate sets the size of the upfront tax bill, while your expected retirement rate sets how much tax a Roth lets you avoid — the higher your retirement rate, the bigger the potential saving. Because the calculator assumes the conversion tax is paid from money outside the IRA, both scenarios grow at the same return, so the difference between the two tax rates decides the winner.
The converted amount is added to your ordinary income for the year, so you pay your marginal income tax rate on it — for example, converting $50,000 at a 24% marginal rate costs $12,000 in federal tax, and state taxes may add more. The calculator above works this out for your own numbers.
Conversions usually make the most sense when your current tax rate is lower than the rate you expect in retirement — for example, in early retirement years before pensions, Social Security, or required minimum distributions begin. They can also suit people who want tax-free withdrawals for flexibility, to manage Medicare premiums or required minimum distributions, or to leave a tax-free inheritance.
Each Roth conversion has its own five-year waiting period. If you withdraw converted money within five years and you are under 59½, you may owe a 10% early-withdrawal penalty on the withdrawal, even though the income tax was already paid at conversion. Once you are 59½ and the five years have passed, qualified withdrawals are completely tax-free.
No. Recharacterisation of Roth conversions was removed by the Tax Cuts and Jobs Act of 2017, effective from 2018, so a conversion cannot be undone. Only regular Roth IRA contributions — not conversions — can still be recharacterised, so be sure before you convert.