Finance
Roth Conversion Calculator
Roth conversions let you pay tax now in exchange for tax-free growth later. Estimate the tax bill today and compare the after-tax value of converting versus leaving the money in a traditional account.
Quick answer: A Roth conversion makes sense when you expect a higher tax rate in retirement and can pay the conversion tax from outside funds, in exchange for decades of tax-free growth.
How it works
1. Measure the tax cost today
Converting traditional IRA or 401(k) money to a Roth adds the converted amount to this year's taxable income. You pay income tax now at your current bracket on the converted balance. Paying the tax from outside funds, rather than from the conversion itself, maximizes the benefit.
2. Project tax-free growth
Once in the Roth, the money grows tax-free and qualified withdrawals in retirement are not taxed. The calculator compares the after-tax value of converting now against leaving the money in a traditional account and paying tax at withdrawal. Longer time horizons favor conversion.
3. Compare future tax rates
The core question is whether your tax rate today is lower than it will be in retirement. Converting makes sense when you expect higher future rates, want to avoid required minimum distributions, or have a low-income year. The calculator frames the breakeven so you can decide. This is a planning estimate, not tax advice.
Frequently asked questions
When does a Roth conversion make sense?
Generally when you expect your tax rate in retirement to be higher than it is today, or when you can pay the conversion tax from outside funds and want decades of tax-free growth.
How is the conversion taxed?
The converted amount is added to your taxable income for the year and taxed at your marginal rate. The calculator estimates that upfront cost.
What's the catch?
You owe the tax now, ideally paid from non-retirement money so the full balance keeps compounding. Converting too much in one year can push you into a higher bracket.