A Roth conversion moves money from a Traditional IRA or 401(k) into a Roth IRA. You pay income tax on the converted amount now, but the money then grows and can be withdrawn tax-free in retirement. The question is whether paying taxes today is a better deal than paying them later.
When Does a Roth Conversion Make Sense?
The math depends on a few key variables: your tax rate now versus in retirement, how long the money has to grow, and whether you pay the conversion tax from outside funds or from the IRA itself. The calculator below uses actual 2025 federal tax brackets to model the conversion precisely—including how much of it gets taxed in each bracket.
Keep in Traditional
- Money grows tax-deferred
- You pay income tax on every dollar you withdraw
- RMDs start at age 73—you must withdraw whether you need it or not
Convert to Roth
- Pay income tax now on the amount you convert
- Money then grows tax-free forever
- No RMDs—leave it growing as long as you want
Roth Conversion
Moving pre-tax retirement funds (Traditional IRA, 401(k), 403(b)) into a Roth IRA. The converted amount is added to your taxable income for the year. There are no income limits on conversions—unlike Roth IRA contributions. You can convert any amount. The 5-year rule requires waiting 5 years before withdrawing converted amounts penalty-free (if under 59½).
The Calculator
Enter your Traditional IRA balance, how much you're considering converting, your income, and filing status. The calculator uses progressive federal tax brackets to compute the actual tax on your conversion and future withdrawal, rather than a single flat rate.
Advanced Options
| Bracket | Amount | Tax |
|---|---|---|
| 12% federal | $6,950 | $834 |
| 22% federal | $43,050 | $9,471 |
| 5.0% state | $50,000 | $2,500 |
| Total conversion cost | $50,000 | $12,805 (25.6%) |
Keep in TraditionalBETTER
Convert to Roth
Bracket-filling strategy: The bracket breakdown above shows how your conversion is taxed across brackets. Many advisors recommend converting just enough to fill your current bracket each year, then repeating annually. This keeps the effective rate low while steadily moving funds to Roth.
The “Tax Rate Arbitrage” Window
Roth conversions are most powerful during years when your income is temporarily low:
- Between retirement and Social Security. If you retire at 60 but don't claim Social Security until 67 or 70, those low-income years are prime conversion territory. You can convert at the 10% or 12% bracket and avoid paying 22%+ later.
- Sabbaticals or career transitions. A year off work means lower income. Converting during that year lets you pay a lower rate.
- Market downturns. If your portfolio drops 30%, converting the same number of shares costs 30% less in taxes—and all the recovery growth happens tax-free inside the Roth.
- Before RMDs begin. Once Required Minimum Distributions start at age 73, those forced withdrawals add to your taxable income. Converting before then reduces future RMDs and the tax hit that comes with them.
Paying the Tax: Inside vs. Outside
One of the biggest factors in whether a conversion pays off is where the tax money comes from:
- Outside funds (recommended): If you pay the conversion tax from a checking account, brokerage, or savings, the full converted amount goes into the Roth. This is almost always the better move, because every dollar in the Roth grows tax-free.
- From the IRA itself: If you use part of the IRA to cover taxes, less money goes into the Roth. The portion used for taxes is treated as a regular distribution (not a Roth conversion), so if you're under 59½, it's subject to a 10% early withdrawal penalty on top of income tax. The calculator above models this penalty when applicable.
The Multi-Year Conversion Strategy
Instead of converting your entire Traditional balance in one year (and getting hit with a huge tax bill), many people spread conversions over 3–7 years. The strategy:
- Find the top of your current bracket. Check the partial conversion table above—it shows how the effective rate changes as you convert more. You want to convert enough to fill your current bracket without spilling into the next one.
- Convert just enough to fill the bracket. The bracket breakdown section shows exactly how much room you have. Converting within one bracket keeps your effective rate at its lowest.
- Repeat each year. Over 5–7 years, you can convert a substantial amount while keeping the tax rate low each year.
What the Calculator Doesn't Cover
This calculator models the core math with progressive tax brackets, but several real-world factors can shift the decision:
- Medicare IRMAA surcharges. High income from a conversion can trigger higher Medicare Part B and Part D premiums two years later. The calculator warns you if your income exceeds the first IRMAA threshold, but doesn't compute the exact surcharge for each tier.
- ACA premium tax credits. For early retirees (under 65) on Marketplace health insurance, conversion income increases your MAGI, which can reduce or eliminate premium subsidies. This hidden cost can be $10,000–$20,000+ per year in lost subsidies—often larger than the income tax itself.
- Social Security taxation. Conversion income can cause more of your Social Security benefits to become taxable (up to 85% of benefits). In certain income ranges, the effective marginal rate on conversion income can spike well above the nominal bracket due to this “tax torpedo” effect.
- Net Investment Income Tax. Conversion income doesn't directly trigger the 3.8% NIIT, but it increases your MAGI, which could push your investment income over the threshold ($200,000 single / $250,000 married).
- State-specific rules. Some states don't tax retirement income or have special exclusions for IRA withdrawals. A conversion might be taxed at the state level when a Traditional withdrawal wouldn't be.
- Pro-rata rule. If you have both pre-tax and after-tax (non-deductible) contributions in your Traditional IRA, you can't choose to convert only the after-tax portion. The IRS requires you to prorate the taxable and non-taxable portions across all your Traditional IRA balances.
- Estate planning. Roth IRAs pass to heirs tax-free and have no RMDs during the original owner's lifetime, making them powerful estate planning tools. This benefit isn't captured in the calculator.
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Data source: 2025 federal tax brackets from the IRS. Calculator uses progressive bracket math for both the conversion tax and the future withdrawal tax. Capital gains on outside funds taxed at 15% long-term rate. Real-world results will vary—consult a tax professional before making conversion decisions.
Talk to an Advisor
Roth conversions sit at the intersection of investment management, tax planning, and retirement income strategy. The calculator above handles the core comparison, but an advisor can help with the harder questions:
- How much to convert each year without bumping into a higher bracket or triggering IRMAA surcharges.
- Coordinating with Social Security timing. Delaying Social Security creates a low-income window that's ideal for conversions.
- Tax-loss harvesting to offset conversion income. Realizing investment losses in the same year can reduce the net tax hit of a conversion.
- ACA subsidy planning. If you're under 65 and on a Marketplace plan, an advisor can help you convert just enough without losing your premium subsidy.
- Estate planning implications. If leaving assets to heirs is a priority, a Roth conversion now can save your beneficiaries significant taxes.