🔄 Roth Conversion Calculator
Compare converting a traditional IRA or 401(k) balance to a Roth IRA now versus leaving it traditional, based on your current and expected future tax rates.
Conversion Details
Your Result
This is a simplified comparison for informational purposes only, not tax or financial advice. It does not account for Medicare IRMAA surcharges, state taxes, RMD rules, or bracket-by-bracket conversion strategies. Consult a tax professional before converting.
How the Roth Conversion Calculator Works
A Roth conversion means moving money from a traditional (pre-tax) IRA or 401(k) into a Roth IRA, paying ordinary income tax on the converted amount now, in exchange for tax-free growth and withdrawals later. This calculator compares the after-tax future value of converting now versus leaving the balance traditional and paying tax on withdrawal.
Formula
Stay Traditional: After-Tax Value = Balance × (1 + Growth Rate)ⁿ × (1 − Future Tax Rate)
Where n = years until withdrawal
The Key Insight
If you pay the conversion tax from the converted balance itself and your current tax rate equals your expected future tax rate, converting now versus staying traditional produces the exact same after-tax result — the math is equivalent regardless of when the tax is paid. Converting becomes advantageous specifically when you expect to be in a higher tax bracket in retirement than you are now, want to lock in today's lower rate, want to avoid future Required Minimum Distributions (Roth IRAs have none for the original owner), or want to leave a tax-free inheritance. Paying the conversion tax from outside funds instead effectively invests extra money into the Roth, so it shows a larger advantage — but that advantage reflects the additional capital deployed, not a pure "which account is better" comparison.
Worked Example
A $100,000 traditional balance, 24% current tax rate, growing at 7% annually for 20 years, paying the conversion tax from the balance itself: if your future tax rate is also 24%, both paths reach the same $294,096 after-tax value. But if your future tax rate rises to 32%, staying traditional only nets about $263,139 after-tax — converting now would have been the better choice by roughly $30,957.
Frequently Asked Questions
What is a Roth conversion?
A Roth conversion is moving funds from a traditional (pre-tax) retirement account into a Roth IRA. You pay ordinary income tax on the converted amount in the year of conversion, and future growth and qualified withdrawals are tax-free.
When does a Roth conversion make sense?
Generally when you expect to be in a higher tax bracket in the future than you are now, when you have a low-income year, when you want to avoid future Required Minimum Distributions, or when you want to leave tax-free assets to heirs.
Should I pay the conversion tax from the converted balance or other funds?
Paying the conversion tax from outside funds is often recommended in practice, since it lets the full converted amount grow tax-free in the Roth — but that comparison isn't apples-to-apples, because it means investing extra outside money. Paying the tax from the converted balance itself gives a fair, same-total-capital comparison between converting and staying traditional; this calculator defaults to that mode so you can see the pure effect of your tax-rate assumptions before layering in the additional benefit of using outside funds.
Is this calculator tax advice?
No. This is a simplified educational tool. Roth conversions have real-world complexities — Medicare IRMAA surcharges, state taxes, the five-year rule, and bracket management — that a tax professional should review before you convert.