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Roth Conversion Calculator
Should you convert your traditional IRA to a Roth IRA now and pay the tax today, or leave it alone and pay tax on withdrawals in retirement? This calculator runs both paths side by side — the tax bill today, what each account is worth at retirement, and which choice leaves you with more money.
Estimates only, not financial advice. Tax rules are complex and change over time; talk to a qualified tax professional before converting an IRA.
How it works
A traditional IRA and a Roth IRA are mirror images of each other. With a traditional IRA, you get a tax break when the money goes in, the money grows without tax along the way, and you pay ordinary income tax on every dollar you take out in retirement. With a Roth IRA, you pay tax on the money before it goes in, it grows tax-free, and qualified withdrawals in retirement are completely tax-free. A Roth conversion moves money from the first kind of account to the second — and the price is paying the tax now, in the year you convert.
The calculator compares two futures for the same starting balance. On the Roth path, you pay tax on the conversion today: balance × your current tax rate. That tax comes out of the account, so the amount that actually converts is the balance minus the tax — and only that converted amount grows tax-free. At retirement it is worth (balance − tax now) × (1 + annual return) raised to the power of the number of years, and every dollar of that is yours, tax-free. On the traditional path, the full balance grows at the same rate, but when you withdraw it you owe tax at your retirement rate, so what you actually keep is balance × (1 + return) raised to the power of years × (1 − retirement tax rate). The difference between the two final numbers is the winner — and by how much. Because the comparison starts from the same pot of money on both sides, it is a fair one: no path gets extra money from outside the account.
The single biggest driver of the answer is the gap between your tax rate today and your tax rate in retirement. If your rate in retirement will be higher than it is now — because your income rises, tax brackets change, or required minimum distributions push you into a higher bracket — converting usually wins, because you are paying tax at today's cheaper rate. If your retirement rate will be lower, leaving the money alone usually wins, because you are deferring the tax until it costs less. That is why the years just before retirement, when income often dips, can be a good window to convert.
There is a subtle second factor: where the conversion tax comes from. This calculator assumes the tax comes out of the IRA balance itself, which keeps the comparison honest — both paths start from the same $50,000. In real life, if you pay that tax from savings outside the IRA, the full balance converts and stays invested, so the Roth ends up holding more than the calculator shows. That is a real advantage, but it comes from the outside money, not from the conversion alone: the cash you used to pay the tax is no longer yours to invest elsewhere. The cleanest conversions happen when you have cash on hand to pay the tax bill without touching the account — just know that the calculator's tie at equal tax rates assumes the tax is paid from the account.
A few rules shape the decision beyond the math. Each conversion starts its own five-year clock, and pulling converted money out early can trigger a 10 percent penalty if you are under 59 and a half. Conversions can no longer be undone — since 2018 there is no way to recharacterize a conversion back, so the tax bill is final once you convert. And converting adds to your taxable income in that year, which can push you into a higher bracket or affect income-based costs such as Medicare premiums. Many people convert a slice each year, just enough to fill up their current bracket, rather than converting everything at once.
Worked example
Maria has $50,000 in a traditional IRA. Her current tax rate is 22 percent, she expects her investments to earn 7 percent a year, she plans to retire in 20 years, and she expects her retirement tax rate to also be 22 percent. Does converting help her?
Step 1: Tax on the conversion now — $50,000 × 22% = $11,000.
Step 2: Growth factor over 20 years — (1 + 0.07)^20 = 3.8697.
Step 3: Amount that actually converts — $50,000 − $11,000 = $39,000. Roth value at retirement — $39,000 × 3.8697 = $150,918, all tax-free.
Step 4: Traditional value before tax — $50,000 × 3.8697 = $193,484.
Step 5: Traditional value after retirement tax — $193,484 × (1 − 0.22) = $193,484 × 0.78 = $150,918.
Step 6: Compare — $150,918 − $150,918 = $0. A tie.
When Maria's tax rate is the same in both years, converting neither helps nor hurts: the tax she pays now exactly cancels the tax she would have paid later, because the same rate applies to the same grown balance. The Roth only pulls ahead when her retirement rate is higher than today's — for example, if her current rate were 12% instead of 22%, the tax now would be $6,000, $44,000 would convert and grow to $170,266, and the Roth would win by $19,348. Change any input above — especially the two tax rates — and the winner can flip.
FAQ
Is a Roth conversion worth it if my tax rate stays the same?
If your tax rate is exactly the same now and in retirement, and you pay the conversion tax out of the IRA itself, both paths end up equal. But if you pay the tax from savings outside the IRA, the Roth usually wins, because the full balance keeps growing tax-free instead of shrinking by the tax bill.
Do I pay tax on a Roth conversion now?
Yes. The amount you convert from a traditional IRA is added to your taxable income in the year of the conversion, and you pay ordinary income tax on it at your current rate. There is no 10 percent early withdrawal penalty on a conversion, even if you are under age 59 and a half.
Does the five-year rule apply after a conversion?
Yes. Each conversion has its own five-year clock, and withdrawing converted money before five years pass can trigger the 10 percent early withdrawal penalty if you are under 59 and a half. Earnings in the Roth also need five years plus age 59 and a half to come out tax-free.
Can I undo a Roth conversion?
No. Since 2018, Roth conversions can no longer be recharacterized or undone. Once you convert, the tax bill for that year is final, so it pays to model the numbers first and convert in a year when your income, and therefore your tax rate, is lower than usual.
Should I convert in a low-income year?
Often yes. A year between jobs, a sabbatical, or the early years of retirement before required minimum distributions begin can drop you into a lower tax bracket, which makes the conversion cheaper. Many people convert a little each year to fill up a lower bracket without jumping into the next one.