Roth Conversion Calculator
See what a Roth conversion costs in tax today, what it could be worth at withdrawal, and the future tax rate at which converting beats leaving the money in a traditional IRA.
Currency only changes how amounts are displayed. No amounts are converted.
Inputs
Default values are examples. Replace them with your own figures.
Results
Extra after-tax wealth at withdrawal
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After-tax wealth at withdrawal
Year-by-Year Comparison
After-tax wealth if you convert now versus leaving the money in the traditional IRA.
| Years from now | Roth pathway | Traditional pathway | Advantage |
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Break-Even Future Tax Rate
How the outcome shifts with the tax rate you expect in retirement.
| Retirement tax rate | Roth pathway | Traditional pathway | Advantage |
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Conversion Amount Scenarios
Partial conversions spread the tax and keep part of the IRA traditional.
| Amount converted | Tax due now | Roth at withdrawal | Advantage |
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What Is a Roth Conversion Calculator?
A Roth Conversion Calculator is a retirement planning tool that helps estimate the potential tax impact of transferring eligible retirement savings from a traditional IRA or another eligible retirement account into a Roth IRA. It can help you compare the estimated tax cost of converting funds today with the possible long-term benefits of Roth retirement savings.
Traditional retirement accounts often provide tax advantages when eligible contributions are made or during the accumulation period. Withdrawals from traditional IRAs are generally taxable to the extent they represent pre-tax amounts. By contrast, qualified Roth IRA distributions are generally tax-free under applicable rules.
A Roth conversion changes the tax treatment of eligible retirement assets. The taxable portion of a conversion is generally included in your income for the year the conversion occurs. This may increase your federal income tax and, where applicable, state or local taxes.
A Roth conversion calculator helps you estimate how much of a conversion may be taxable, the potential additional tax, and whether converting some or all of your eligible retirement assets fits your long-term retirement strategy. Results depend on your tax situation, retirement account basis, income, filing status, and assumptions about future tax rates and investment growth.
What Is a Roth Conversion?
A Roth conversion generally involves moving eligible assets from a traditional IRA, SEP IRA, SIMPLE IRA, or another eligible retirement plan into a Roth IRA, subject to the rules governing the source account and the transaction.
When pre-tax retirement funds are converted, the taxable portion is generally included in the account owner's ordinary income for that tax year. A conversion can therefore create an upfront tax liability even when the money remains invested inside a retirement account.
Traditional IRA
Eligible contributions may be deductible, and investment growth generally accumulates tax-deferred. Withdrawals are generally taxable to the extent they represent pre-tax funds and taxable earnings.
Roth IRA
Contributions are generally made with after-tax money. Qualified distributions, including eligible earnings, are generally tax-free when the applicable requirements are met.
A conversion does not automatically make every future withdrawal tax-free. Roth IRA distribution rules, holding periods, age requirements, and other conditions still apply.
How Does a Roth Conversion Calculator Work?
A Roth conversion calculator estimates the amount transferred into a Roth account, the taxable portion of the conversion, and the additional tax that may result. More advanced calculators can compare long-term account growth and estimated after-tax retirement wealth under different scenarios.
A simplified starting point for a fully taxable conversion is:
Taxable Conversion Amount = Amount Converted − Eligible Nontaxable Amount
The nontaxable portion cannot always be determined by simply subtracting the balance of nondeductible contributions from the amount converted. Traditional, SEP, and SIMPLE IRA balances may be subject to aggregation and pro-rata tax rules. The calculation can also depend on other IRA distributions and year-end account values.
To estimate the additional income tax, compare projected tax under two scenarios:
Estimated Additional Tax =
Tax With Conversion − Tax Without Conversion
This comparison is generally more useful than simply multiplying the conversion amount by a single marginal tax rate. Additional income can move part of your income into a higher tax bracket or affect other income-based tax calculations.
How to Use the Roth Conversion Calculator
Follow these steps to estimate the potential tax impact of converting traditional retirement savings into a Roth IRA. The exact fields depend on the calculator you are using.
- Enter the conversion amount: Specify the amount you are considering transferring to the Roth IRA.
- Enter your current income: Add the relevant annual income information, filing status, and applicable deductions or adjustments requested by the tool.
- Account for tax basis: If you have nondeductible IRA contributions or other after-tax amounts, provide the relevant information where supported.
- Include other IRA balances when required: Traditional, SEP, and SIMPLE IRA balances can affect the taxable portion under pro-rata rules.
- Choose applicable tax assumptions: Enter the federal and state tax assumptions supported by the calculator, and confirm the relevant tax year.
- Estimate your tax with and without conversion: Review the potential additional tax rather than treating the entire conversion amount as the tax cost.
- Compare long-term scenarios: Where available, test different conversion amounts, future returns, retirement dates, and future tax rate assumptions.
- Review the results: Consider the estimated tax liability, funds available to pay it, future withdrawal rules, and your overall retirement goals.
Important: A conversion calculator can simplify complex tax rules. For a reliable estimate, account for nondeductible IRA basis, the pro-rata rule, other taxable income, required minimum distributions, and any state tax that applies to your situation.
Roth Conversion Tax Calculation Example
Suppose a taxpayer converts $40,000 from a traditional IRA into a Roth IRA. For this simplified illustration, assume the entire conversion is taxable and the taxpayer's effective incremental tax rate on the conversion is 22%.
| Financial Item | Illustrative Amount |
|---|---|
| Amount converted | $40,000 |
| Assumed taxable portion | $40,000 |
| Illustrative incremental tax rate | 22% |
| Estimated additional income tax | $8,800 |
| Conversion remaining in Roth before paying tax | $40,000 |
The simplified calculation is:
$40,000 × 22% = $8,800
Under these assumptions, the estimated additional income tax is $8,800. The full $40,000 is transferred into the Roth IRA in this example, while the tax liability is paid separately.
The 22% figure here is an illustrative effective incremental rate, not a universal tax rate. In a real return, federal tax brackets, deductions, state income tax, taxable IRA basis, and other factors can make the additional tax different.
This example is for educational purposes only and is not a tax calculation for any particular individual.
How Much of a Roth Conversion Is Taxable?
The taxable portion of a Roth conversion depends on the type of retirement funds being converted and your tax basis in eligible retirement accounts.
For many traditional IRA owners whose balances consist entirely of deductible contributions and pre-tax earnings, most or all of the conversion is generally taxable. If you have made nondeductible contributions, a portion may be nontaxable, calculated under the applicable IRA rules.
| Situation | General Tax Treatment |
|---|---|
| Traditional IRA with entirely pre-tax funds | The converted amount is generally taxable as ordinary income. |
| Traditional IRA with nondeductible basis | A portion may be nontaxable under the applicable basis and pro-rata rules. |
| Eligible workplace plan conversion | Tax treatment depends on the plan distribution and the pre-tax or after-tax amounts transferred. |
| Required minimum distribution | An RMD generally must be taken first and cannot itself be converted to a Roth IRA. |
Traditional, SEP, and SIMPLE IRA balances are generally considered together when applying the IRA pro-rata rules. Form 8606 is used to report certain nondeductible IRA basis and conversions. You should not assume that you can select only the after-tax portion of an IRA conversion without considering these rules.
What Is the Roth Conversion Pro-Rata Rule?
The pro-rata rule generally prevents an IRA owner from treating a conversion as consisting entirely of nondeductible contributions while ignoring pre-tax amounts held in relevant traditional, SEP, and SIMPLE IRAs.
When an individual has both pre-tax IRA funds and nondeductible basis, the taxable and nontaxable portions are generally calculated under IRS aggregation and pro-rata rules. The calculation can take account of distributions during the year and the value of relevant IRA balances at year-end.
Example: Having a nondeductible contribution does not automatically make an equal amount of a Roth conversion tax-free. The result depends on the basis and all relevant IRA balances and transactions under the applicable tax rules.
A Roth conversion calculator may not apply the pro-rata rule correctly unless it asks for the necessary IRA basis, distributions, and account values. Check its methodology before using an estimate for tax planning.
How a Roth Conversion Affects Your Taxes
A taxable Roth conversion increases income for the year in which the conversion is completed. Depending on your circumstances, this can affect more than the direct tax on the amount converted.
Federal Income Tax
The taxable conversion amount generally enters federal taxable income. The additional tax depends on your full income, filing status, deductions, and applicable rates.
State Income Tax
Depending on your state and tax circumstances, a conversion may increase state taxable income. State treatment and available exclusions vary.
Income-Based Benefits and Charges
Higher income may affect some income-based calculations, including Medicare income-related premium adjustments or the taxable portion of Social Security benefits.
Tax Withholding and Payments
You may need to plan for estimated tax payments or adjust withholding to cover the additional liability. Withholding from the retirement account can also change the amount that reaches the Roth account.
These effects depend on the taxpayer's circumstances and the applicable tax rules. An estimate should consider the overall tax impact rather than only the conversion amount multiplied by the headline marginal rate.
Potential Benefits of a Roth Conversion
A Roth conversion can be useful for some retirement strategies, particularly when a taxpayer wants to pay tax on eligible pre-tax retirement funds now in exchange for the potential benefits of Roth treatment in the future.
Potential Tax-Free Qualified Withdrawals
Qualified Roth IRA distributions are generally tax-free under the applicable holding-period and qualifying-event rules.
Tax Diversification
Holding different types of retirement accounts can provide flexibility in managing taxable income across retirement years, depending on future law and circumstances.
Potential Long-Term Growth
Money retained in a Roth IRA may continue to grow under the account's investment strategy. Eligible qualified withdrawals are generally tax-free.
Estate Planning Considerations
Roth assets may offer certain planning advantages for beneficiaries, although inherited-account distribution rules and deadlines can still apply.
These potential benefits should be weighed against the upfront tax, the source of funds used to pay the tax, withdrawal restrictions, and the possibility that future tax rates or personal circumstances may differ from current expectations.
When Might a Roth Conversion Make Sense?
Whether a Roth conversion is appropriate depends on your current tax position, expected retirement income, available cash, investment horizon, and future tax assumptions. There is no universally best year or conversion amount.
During a Relatively Low-Income Year
If your income is temporarily lower than usual, some or all of a conversion may be taxed at lower marginal rates than in a higher-income year. However, other income and tax calculations should still be considered.
When You Have Funds to Pay the Tax Separately
Paying the conversion tax with money outside the retirement account can allow more of the converted amount to remain invested in the Roth IRA. The benefit depends on your circumstances and should be compared with other uses for that cash.
When Planning Across Several Tax Years
Some taxpayers consider converting portions of their eligible retirement savings over multiple years. This can help manage taxable income more deliberately than converting a very large amount in a single year, although the outcome depends on future income and tax rules.
When Future Tax Exposure May Be Different
A conversion may be worth evaluating if you expect your retirement income or tax circumstances to change. However, future tax rates, account returns, legislation, and personal needs are uncertain, so the decision should be based on multiple scenarios rather than one forecast.
When Should You Be Cautious About a Roth Conversion?
A conversion is not always advantageous. In some situations, the upfront tax cost may outweigh the potential benefits, especially when the conversion pushes income into higher tax brackets or requires the use of retirement funds to pay the bill.
- Limited cash reserves: Paying the tax may leave you without enough money for emergency needs or other financial obligations.
- Higher current tax rate: If the conversion is taxed at a higher rate than you expect to face later, converting may be less attractive.
- Income-related consequences: The added income may affect other tax calculations or income-based benefit costs.
- Near-term withdrawals: Money converted to a Roth IRA may be subject to distribution rules, including potential early-distribution penalties in some circumstances.
- Complex IRA basis: Existing nondeductible contributions, other IRA balances, and distributions can make the taxable conversion amount more complicated to determine.
A careful comparison should include a no-conversion scenario and one or more conversion scenarios. The objective is to understand total long-term after-tax outcomes rather than simply minimizing tax in the current year.
Understanding the Roth IRA Five-Year Rules
Roth accounts have five-year rules that can affect the tax treatment of distributions. These rules are not identical, and it is important to distinguish qualified-distribution requirements from the separate rules that may apply to converted amounts withdrawn early.
| Rule | General Purpose | Important Consideration |
|---|---|---|
| Qualified-distribution five-year period | Helps determine when Roth IRA distributions can qualify for tax-free treatment. | Must be considered together with an applicable qualifying event, such as reaching age 59½. |
| Conversion-related five-year period | Can affect the 10% additional tax on certain converted taxable amounts withdrawn early. | A separate five-year period generally applies to each conversion, subject to exceptions. |
For a qualified Roth IRA distribution, the applicable five-tax-year period must generally be satisfied along with an eligible event, such as reaching age 59½, disability, death, or a qualifying first-time home purchase subject to statutory limits.
The conversion-related rule is separate. Taking a distribution of certain taxable converted amounts within the applicable five-year period may trigger an additional 10% tax if you are under age 59½ and no exception applies.
Do not assume that every Roth IRA withdrawal is automatically tax-free or penalty-free merely because it comes from a Roth account. Check the IRS distribution rules and the account's transaction history.
Can You Convert a Required Minimum Distribution?
Required minimum distributions (RMDs) generally cannot be converted to a Roth IRA. If you are required to take an RMD for the year, you generally must satisfy that requirement before converting additional eligible amounts.
The age at which RMDs begin depends on the applicable law and individual circumstances, including birth year and the type of retirement account. Workplace retirement plans may also have rules that differ from those applying to an IRA.
Important: Do not include an RMD in a proposed conversion amount without checking the applicable rules. Ask your account custodian or tax professional how your required distribution should be handled before completing the transaction.
Roth Conversion vs. Traditional IRA Withdrawal
A Roth conversion and a traditional IRA withdrawal are different transactions. A conversion generally transfers eligible assets into a Roth IRA, while a withdrawal pays money out of the retirement account to the account owner.
| Feature | Roth Conversion | Traditional IRA Withdrawal |
|---|---|---|
| Destination of funds | Transferred to a Roth IRA or eligible Roth retirement account. | Paid out of the retirement account to the owner. |
| Potential income tax | The taxable portion is generally included in income for the conversion year. | The taxable portion is generally included in income for the distribution year. |
| Retirement account treatment | Funds remain in a retirement account under Roth rules. | Withdrawn money is no longer held in the original retirement account. |
| Early-distribution rules | Conversion rules and later Roth distribution rules may apply. | Applicable tax and early-distribution penalty rules may apply. |
A conversion is not simply a way to withdraw retirement funds without tax. It involves a change in account tax treatment and can create an immediate tax bill. A taxable withdrawal and a conversion should therefore be evaluated separately.
Limitations of a Roth Conversion Calculator
A Roth conversion calculator is a planning tool, not an official tax-return preparation system. Its estimates are only as accurate as the information and tax assumptions entered into the calculation.
- Tax brackets can change: The calculator may use assumed tax rates that differ from the rates applicable to your conversion year.
- Taxable basis may be complicated: Nondeductible contributions and the pro-rata rule can affect the taxable portion of a conversion.
- State tax treatment varies: State income taxes and retirement-income rules differ by jurisdiction.
- Future returns are uncertain: Investment performance may differ from the assumed growth rate.
- Long-term rules may change: Future tax law and personal circumstances may alter the outcome.
- Other financial effects may be omitted: Medicare premiums, Social Security taxation, deductions, credits, and other income-related calculations may not be fully modeled by a basic calculator.
Use the result as a starting point for comparing scenarios. Before completing a large conversion, verify the taxable amount, estimated tax payment requirements, and retirement distribution rules relevant to your circumstances.
Frequently Asked Questions
What is a Roth Conversion Calculator?
A Roth Conversion Calculator estimates the potential tax impact of transferring eligible retirement savings into a Roth IRA. Depending on the tool, it may estimate taxable conversion income, additional taxes, and potential long-term retirement account growth.
What is a Roth conversion?
A Roth conversion is a transaction that moves eligible retirement funds from a traditional IRA or another eligible retirement account into a Roth IRA or eligible Roth account. The taxable portion is generally included in income for the year of conversion.
Is a Roth conversion taxable?
The taxable portion of a Roth conversion is generally included in ordinary income for the conversion year. Nondeductible basis and other applicable tax rules may affect the taxable amount. State tax treatment may also apply.
How much tax will I pay on a Roth conversion?
The additional tax depends on the taxable conversion amount, your other income, filing status, deductions, tax brackets, and state rules. Compare projected tax with the conversion against projected tax without it rather than relying only on a single marginal-rate estimate.
Can I convert a traditional IRA to a Roth IRA regardless of income?
In general, income limits that restrict direct Roth IRA contributions do not impose the same limitation on Roth conversions. However, eligibility, plan rules, transaction requirements, and the tax consequences of the conversion still need to be considered.
What is the Roth conversion pro-rata rule?
The pro-rata rule generally requires pre-tax amounts and nondeductible basis across relevant traditional, SEP, and SIMPLE IRA balances to be considered when determining the taxable portion of an IRA conversion. It can prevent a taxpayer from converting only after-tax IRA money for tax purposes while ignoring other relevant balances.
Can I convert only part of my traditional IRA?
Generally, you can convert a portion of eligible retirement assets instead of converting the entire account. The taxable portion of a partial conversion depends on the relevant account type, tax basis, and applicable rules.
Should I pay conversion taxes from outside retirement savings?
When practical, paying the tax from funds outside the retirement account can leave more of the converted amount invested in the Roth account. However, retaining cash for emergencies, considering other uses for the money, and reviewing your tax position are also important.
Can I reverse a Roth conversion?
Roth conversions made in 2018 or later generally cannot be recharacterized back into a traditional IRA. This makes it important to evaluate the taxable amount, tax payment plan, and transaction details before converting.
What is the five-year rule for Roth IRAs?
Roth IRAs have a five-tax-year period relevant to qualified distributions. Qualified distributions must also satisfy an eligible condition, such as reaching age 59½. A separate conversion-related five-year rule may affect the additional tax on certain early withdrawals of converted taxable amounts.
Can I convert an RMD to a Roth IRA?
Generally, no. A required minimum distribution must be taken when due and cannot itself be converted to a Roth IRA. Confirm your RMD amount and account-specific requirements before making a conversion.
Does a Roth conversion affect Medicare premiums?
It can. A taxable conversion may increase income used in calculations for Medicare income-related premium adjustments. The effect depends on your income, the applicable reference year, and the rules in force.
Does a Roth conversion affect Social Security taxes?
It may. Additional taxable income from a conversion can affect the calculation that determines whether a portion of Social Security benefits is taxable. The result depends on your overall income and individual circumstances.
Is a Roth conversion better in a low-income year?
A lower-income year may provide an opportunity to convert some eligible funds at a lower marginal tax rate. However, the full conversion amount, deductions, other income-based effects, future tax expectations, and available funds to pay the tax should all be considered.
Can I complete Roth conversions over multiple years?
Eligible conversions can generally be spread over multiple tax years. This may help with tax-bracket planning, but each year's income, tax rules, account values, and other circumstances should be evaluated independently.
Are Roth conversion taxes paid immediately?
The taxable conversion is generally reported for the year in which it occurs. You may need to cover the resulting liability through withholding or estimated tax payments under the applicable rules. Consult the IRS guidance or a tax professional for your payment obligations.
Does a Roth conversion affect my required minimum distributions?
Converting eligible funds into a Roth IRA changes the account in which those assets are held. Roth IRA owners generally do not have lifetime RMDs from their own Roth IRAs under current federal rules, but workplace Roth accounts and beneficiary accounts can have different requirements. RMDs due from a traditional account still need to be handled according to the applicable rules.
Is a Roth conversion tax-free after age 59½?
No. Reaching age 59½ does not generally make the conversion itself tax-free. The taxable portion of a conversion is generally income in the conversion year. Age and holding-period rules primarily affect the treatment of eligible distributions.
Are Roth conversion calculator results guaranteed?
No. Results depend on the calculator's assumptions about tax rates, income, account basis, investment returns, and future withdrawals. Actual tax liability and long-term outcomes may differ.
Roth Conversion Tax Resources
Review official IRS guidance for current tax reporting requirements and the rules relevant to IRA conversions and Roth distributions.
- IRS — Roth IRA Contributions and Conversions
- IRS — Retirement Plans FAQs Regarding IRAs
- IRS Publication 590-A — Contributions to Individual Retirement Arrangements
- IRS Publication 590-B — Distributions from Individual Retirement Arrangements
- IRS Instructions for Form 8606 — Nondeductible IRAs
This content is intended for general educational purposes and does not constitute personalized tax, legal, or financial advice. Tax treatment depends on the account type, transaction details, and applicable law. Verify your situation with the IRS guidance or a qualified tax professional before completing a conversion.