About the Roth Conversion Calculator
This Roth conversion calculator compares two futures for the same pre-tax money. In one, you convert part of a traditional IRA or 401(k) to a Roth IRA today, pay income tax on the converted amount now, and let it grow tax-free. In the other, you leave it in the traditional account, let it grow tax-deferred and pay tax at your future rate when you withdraw it.
It is useful for anyone weighing a conversion in a low-income year, early retirees filling up low tax brackets before RMDs and Social Security start, and savers checking whether a backdoor Roth or partial conversion is worth it. The result shows the net benefit in future dollars and the future tax rate at which the two choices break even.
The model assumes the same investment return in both accounts. If you pay the conversion tax from a taxable account, the no-conversion scenario keeps that cash invested in a taxable account whose gains are taxed at your capital gains rate — this is why conversions usually win when tax rates stay the same. Paying the tax out of the converted amount (and under age 59½) is far less efficient.
With the default inputs, the net benefit of converting is $8,604.66. Change any value above to recalculate instantly.
How to use the roth conversion calculator
- 1Enter how much you plan to convert this year.
- 2Enter your marginal tax rate including the converted income, and the rate you expect in retirement.
- 3Set the years until you will withdraw and your expected return.
- 4Choose whether you will pay the tax from a taxable account or from the converted money.
- 5Compare the net benefit and break-even tax rate before deciding how much to convert.
Formula and method
Converting amount C costs C × t_now in tax today. If you pay that tax from outside money, all of C lands in the Roth and grows to C × (1+r)^n, tax-free. If you do not convert, the traditional account grows to the same C × (1+r)^n but loses t_future to income tax at withdrawal — while the cash you would have spent on tax stays invested in a taxable account, where its gains are taxed at the capital gains rate.
If you pay the tax from the converted amount instead, the Roth receives only C × (1 − t_now), and the comparison reduces to whether your tax rate is higher now or later. The break-even rate is the future tax rate that makes both after-tax values equal.
- C
- Amount converted
- t_now
- Marginal tax rate on the conversion today
- t_future
- Marginal tax rate when withdrawing from a traditional account
- r
- Annual investment return (same in both scenarios)
- n
- Years until the money is withdrawn
Worked examples
$50,000 conversion, 22% now vs 24% later, tax paid from savings
Converting $50,000 costs $11,000 now and grows to about $193,484 tax-free over 20 years at 7%. Not converting leaves a traditional balance worth about $147,048 after 24% tax plus the $11,000 kept in a taxable account, worth about $37,832 after capital gains tax — roughly $184,880 in total. Converting wins by about $8,605, and would still win unless your future rate fell below about 19.55%.
Same rates now and later, tax paid from the IRA
When the tax comes out of the converted money and the rate is identical now and later, the two paths are mathematically equal: $38,000 growing tax-free equals $50,000 growing and then taxed at 24%.
High earner expecting a lower rate in retirement
Converting $100,000 at a 35% rate costs $35,000 today. Even with the side fund advantage, a 22% retirement rate makes keeping the traditional account about $23,823 better after 15 years (the break-even future rate is about 31.9%), so a conversion in a lower-income year would be smarter.
Frequently asked questions
Do I pay tax on a Roth conversion?+
Yes. The pre-tax amount you convert is added to your taxable income for the year and taxed at ordinary income rates. There is no 10% early-withdrawal penalty on the conversion itself, but the extra income can push you into a higher bracket and raise Medicare premiums two years later.
When does a Roth conversion make sense?+
Conversions work best in years when your tax rate is unusually low — early retirement before Social Security and RMDs, a sabbatical, or a year with large deductions — when you can pay the tax from outside savings, and when the money has many years to grow.
What is a backdoor Roth IRA?+
High earners above the Roth income limits can make a non-deductible contribution to a traditional IRA and then convert it to a Roth. If you have no other pre-tax IRA money, the conversion is nearly tax-free; otherwise the pro-rata rule taxes part of it.
What is the Roth conversion 5-year rule?+
Each conversion has its own five-year clock, starting January 1 of the conversion year. If you are under 59½ and withdraw converted money before five years pass, the converted amount can be hit by the 10% penalty even though tax was already paid.
Can I undo a Roth conversion?+
No. Recharacterizing a conversion back to a traditional IRA was eliminated for conversions made after 2017, so any conversion is final. Converting in smaller slices across several years reduces the risk of overshooting a bracket.
Does converting reduce required minimum distributions?+
Yes. Roth IRAs have no RMDs for the original owner, so converting shrinks the pre-tax balance that future RMDs are calculated on and can lower taxable income in your 70s and 80s.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.