Roth IRA Conversion Calculator

Should you convert your Traditional IRA to a Roth IRA? Compare both scenarios side by side, see the tax impact, and find the break-even point where Roth conversion pays off. Make an informed decision about your retirement savings.

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Current Traditional IRA Balance ($)

Annual Return Rate (%)

Current Tax Rate (%)

Expected Retirement Tax Rate (%)

Years Until Retirement

Pay Conversion Tax From Outside Funds?

Real-World Roth Conversion Examples

💼 Mid-Career Professional

A 45-year-old has $100,000 in a Traditional IRA, expects 7% annual returns, currently in the 24% tax bracket, and expects 22% in retirement. They plan to retire in 20 years and will pay conversion taxes from outside funds.

Traditional IRA (after tax): ~$302,000

Roth IRA (after conversion): ~$386,900

Savings with Roth Conversion: ~$84,900 more. The break-even occurs around year 3.

Paying conversion tax from outside funds preserves the full IRA balance for growth, making Roth conversion highly advantageous when current and future tax rates are similar.

🧓 Pre-Retirement Strategist

A 55-year-old has $200,000 in a Traditional IRA, expects 6% returns, currently in the 22% bracket, expects 24% in retirement (due to RMDs and Social Security). They plan to retire in 10 years and will pay taxes from the IRA balance.

Traditional IRA (after tax): ~$272,000

Roth IRA (after conversion): ~$279,000

Even though conversion taxes are paid from the IRA, the Roth still comes out ahead because the retiree expects a higher tax rate in retirement. This illustrates why converting during low-income years can be beneficial.

🎓 Young Accumulator

A 30-year-old has $25,000 in a Traditional IRA, expects 8% returns, currently in the 12% bracket (early career), and expects 24% in retirement. They plan to retire in 35 years and will pay conversion taxes from outside funds.

Traditional IRA (after tax): ~$284,000

Roth IRA (after conversion): ~$370,000

Savings with Roth Conversion: ~$86,000 more. This is an ideal conversion scenario — low current tax rate, long time horizon, and expected higher future taxes.

Converting during low-income years (early career, sabbatical, or market downturn) maximizes the benefit of Roth conversion.

Understanding Roth IRA Conversion

A Roth IRA conversion involves moving funds from a Traditional IRA (pre-tax) to a Roth IRA (post-tax). You pay income tax on the converted amount now, but all future growth and withdrawals are tax-free. The key question: Is it better to pay taxes now or later?

Key Formulas

Traditional IRA Future Value = Balance × (1 + r)ⁿ

Balance = Current IRA balance · r = Annual return rate
n = Years until retirement

Traditional IRA After Tax = Future Value × (1 − Tax Rate_retirement)

Withdrawals from Traditional IRAs are taxed as ordinary income in retirement

Roth IRA Balance After Conversion = Balance − Conversion Tax

Conversion Tax = Balance × Current Tax Rate (if paid from IRA)
or $0 (if paid from outside funds)

Roth IRA Future Value = Roth Balance × (1 + r)ⁿ

Roth IRA withdrawals are tax-free in retirement (after age 59½ and 5-year holding period)

How the Comparison Works

Traditional IRA Scenario: Project the balance forward using compound growth, then subtract estimated retirement taxes to get the after-tax value.

Roth IRA Scenario: Subtract conversion taxes from the current balance (if paying from IRA), then project growth tax-free. If paying from outside, the full balance grows tax-free.

Compare: The difference tells you which strategy leaves you with more money after taxes at retirement.

Break-Even Analysis: Find the year where Roth's cumulative advantage (tax-free growth) overcomes the upfront conversion tax cost.

When Does Roth Conversion Make Sense?

📉 Low Current Tax Rate

Convert during years when your income is temporarily low. You lock in a low tax rate on the conversion while avoiding potentially higher rates in retirement.

📈 High Expected Future Rate

If you expect to be in a higher tax bracket in retirement (due to RMDs, pension, or Social Security), paying taxes now at a lower rate is advantageous.

⏰ Long Time Horizon

More years until retirement means more time for the Roth's tax-free growth to compound and overcome the upfront conversion tax cost.

💵 Outside Funds Available

Paying conversion taxes from non-retirement savings preserves the full IRA balance for growth — the best-case scenario for Roth conversion.

Roth IRA Rules to Know

• 5-Year Rule: You must wait 5 years from the conversion date before withdrawing converted funds penalty-free (the original contribution can be withdrawn anytime).
• Age 59½: Earnings can be withdrawn tax-free and penalty-free after age 59½ and meeting the 5-year rule.
• No RMDs: Roth IRAs have no Required Minimum Distributions (RMDs), making them excellent for estate planning.
• Pro-Rata Rule: If you have multiple IRAs, the IRS considers all Traditional IRAs combined for tax purposes during conversion.

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Side-by-Side Comparison

See Traditional IRA and Roth IRA future values next to each other with a clear winner for every year until retirement.

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Conversion Tax Impact

Understand exactly how much tax you'll pay to convert and whether paying from outside funds or IRA balance is better.

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Break-Even Analysis

Find the exact year when Roth conversion starts paying off — critical for deciding if the timing is right for you.

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Year-by-Year Projection

View annual growth projections for both scenarios with after-tax values and the winning strategy highlighted each year.

Should You Convert Your Traditional IRA to a Roth IRA?

A Roth IRA conversion is one of the most powerful yet misunderstood retirement planning strategies. When you convert, you pay income tax on your Traditional IRA balance today in exchange for tax-free growth and tax-free withdrawals in retirement. The question is whether paying taxes now is better than paying them later.

The decision depends on three key factors: your current tax rate vs your expected retirement tax rate, your investment time horizon, and how you pay the conversion taxes. Our calculator helps you model all three variables to determine whether conversion makes financial sense for your unique situation.

The Power of Tax-Free Growth

When you convert to a Roth IRA, every dollar of growth from that point forward is completely tax-free. Over a 20-30 year investment horizon, this tax-free compounding can result in hundreds of thousands of additional dollars compared to a Traditional IRA, especially if you expect to be in a similar or higher tax bracket in retirement.

Tax Savings = Roth Future Value − Traditional After-Tax Value

The difference between keeping your Traditional IRA and converting to a Roth IRA, accounting for taxes at both conversion and withdrawal.

Why Paying From Outside Funds Matters

One of the most impactful decisions in a Roth conversion is how you pay the taxes. If you pay the conversion tax from your IRA balance, that money leaves the account and never grows again. But if you pay from outside savings (cash or a taxable brokerage account), the full balance converts and continues compounding tax-free. This single choice can make a difference of tens of thousands of dollars over the life of your investment.

Key Strategies for a Successful Roth Conversion

Maximizing the benefit of a Roth IRA conversion requires careful planning and strategic timing. Here are proven approaches to optimize your conversion:

Convert During Low-Income Years: Years when your income drops (career transition, sabbatical, early retirement before Social Security) offer the lowest marginal tax rates for conversion.
Use the Tax Bracket "Headroom": Convert only enough to stay within your current tax bracket. For example, if you're in the 22% bracket, fill it up to the top before hitting 24%.
Consider a Multi-Year Strategy: Instead of converting all at once, spread conversions over several years to manage tax brackets and avoid a large single-year tax bill.
Watch the Medicare Surcharges: Large conversions can increase your Adjusted Gross Income (AGI), potentially triggering higher IRMAA (Medicare Part B and D premiums) in the following two years.
Leverage Market Downturns: Converting when the market is down means you pay taxes on a lower balance, and all subsequent recovery grows tax-free in the Roth account.

Traditional IRA vs Roth IRA: Key Differences

Feature	Traditional IRA	Roth IRA
Contributions	Tax-deductible (if income limits allow)	After-tax (no deduction)
Growth	Tax-deferred	Tax-free
Withdrawals	Taxed as ordinary income	Tax-free (after 59½ and 5-year rule)
RMDs	Required at age 73+	None required
Early Withdrawal	10% penalty + taxes (before 59½)	10% penalty on earnings (contributions can be withdrawn anytime)
Best For	Those in a higher tax bracket now who expect lower rates in retirement	Those in a lower tax bracket now who expect higher rates in retirement

Frequently Asked Questions

What is a Roth IRA conversion?

A Roth IRA conversion is the process of moving funds from a Traditional IRA (pre-tax) to a Roth IRA (post-tax). You pay income tax on the converted amount in the year of conversion. Once in the Roth IRA, the money grows tax-free, and qualified withdrawals in retirement are also tax-free. There is no income limit for Roth conversions, unlike direct Roth IRA contributions.

When does it make sense to convert to a Roth IRA?

Roth conversion is typically most beneficial when: (1) Your current tax rate is lower than your expected retirement tax rate, (2) You have many years until retirement for tax-free compounding, (3) You can pay conversion taxes from outside funds (not from the IRA balance), (4) You're in a temporarily low-income year, or (5) You want to leave a tax-free inheritance to your heirs. Use our calculator to model your specific situation and find your break-even year.

How is the conversion tax calculated?

The conversion tax is calculated as: Converted Amount × Your Marginal Tax Rate. For example, converting $100,000 while in the 24% tax bracket would incur $24,000 in federal income tax. State income taxes may also apply depending on where you live. The converted amount is added to your ordinary income for the year, which could push you into a higher tax bracket — this is why partial conversions over multiple years are often recommended.

Can I undo a Roth IRA conversion?

Prior to 2018, you could "recharacterize" (undo) a Roth conversion. However, the Tax Cuts and Jobs Act eliminated this option starting in 2018. Once you convert to a Roth IRA, the conversion is permanent — you cannot undo it. This makes it especially important to carefully evaluate whether conversion makes sense for your situation before proceeding. The one exception: you can still recharacterize regular Roth IRA contributions (not conversions).

What is the 5-year rule for Roth conversions?

The 5-year rule requires you to wait 5 years from January 1 of the year you make a Roth conversion before you can withdraw the converted funds penalty-free. Each conversion has its own 5-year clock. However, you can withdraw your Roth IRA contributions (not earnings) at any time without tax or penalty. For earnings to be tax-free and penalty-free, you must be at least 59½ AND meet the 5-year rule for your first Roth contribution or conversion.

Does a Roth conversion affect my Medicare premiums?

Yes, a large Roth conversion can increase your Adjusted Gross Income (AGI) for the year, which may trigger higher Medicare Part B and Part D premiums (IRMAA surcharges) two years later. The IRMAA income brackets are adjusted annually for inflation. For 2025, individuals with modified AGI above $106,000 and couples above $212,000 may face higher premiums. This is another reason to consider spreading conversions over multiple years rather than converting a large balance all at once.

⚠️ Important Tax and Penalty Disclaimer: This Roth IRA Conversion Calculator is for informational and educational purposes only. Roth IRA conversion decisions involve complex tax implications, including federal and state income taxes, potential Medicare premium surcharges (IRMAA), and the 5-year holding rule. The pro-rata rule may apply if you have multiple IRAs. Results are estimates based on your inputs and standard tax assumptions — they are not guarantees of future outcomes. Tax laws and rates may change. Consult with a qualified tax professional or financial advisor before making any Roth IRA conversion decisions. This calculator does not provide tax or financial advice.