Roth Conversion Tax Calculator

Frequently Asked Questions

How is the tax on a Roth conversion calculated?

The converted amount is added to your other taxable income for the year and taxed at your marginal bracket rates. For example, if you have $50,000 of ordinary income and convert $30,000, the $30,000 is taxed starting at the bracket where your $50,000 leaves off.

Should I pay the conversion tax from my IRA or from savings?

Always pay from outside savings if possible. Withholding from the IRA reduces the Roth balance and, for those under 59½, triggers a 10% penalty on the withheld amount. Paying from a taxable account ensures the full converted amount works for you inside Roth.

When does a Roth conversion break even?

The break-even depends on the tax rate now versus the rate at future distribution, and the growth rate. At the same tax rate, a conversion breaks even immediately (the tax cost equals the benefit of future tax-free growth). If your current rate is lower than your future rate, conversion is beneficial from day one.

Can I convert just part of my traditional IRA?

Yes. Partial conversions are allowed and are often the best approach - converting just enough to fill a specific bracket or stay below an IRMAA threshold, year after year.

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Estimates for informational purposes only.

Important Disclaimer: Estimates for informational purposes only.

This calculator provides estimates for informational purposes only. Results are based on assumptions and may not reflect actual outcomes. Consult qualified professionals in relevant fields before making important decisions based on these results.

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How This Calculator Works

This calculator estimates the federal income tax cost of a single Roth conversion event. You enter your pre-conversion taxable income (wages, Social Security, RMDs, investment income), the conversion amount, and your filing status. The tool applies 2026 tax brackets to determine how much additional tax you owe and what effective and marginal rates apply to the conversion.

It also projects the long-term value of the converted amount under two scenarios: (1) invested in Roth and grown tax-free, and (2) left in the traditional account and grown tax-deferred but eventually distributed at an assumed future tax rate. The crossover year - when the Roth scenario surpasses the traditional scenario in after-tax value - helps you judge whether the conversion is worthwhile given your time horizon.

When a Roth Conversion Makes Sense

A Roth conversion is generally worthwhile when your current effective tax rate on the conversion is lower than the effective rate you expect to face on future distributions from the same account. Key situations where conversions are attractive:

Low-income retirement years before RMDs: The window between full retirement (60-65) and RMD start (73) often features the lowest taxable income of your life. Converting in these years locks in a favorable tax rate.

After a market decline: Converting when the account balance is temporarily depressed means you convert fewer dollars to achieve the same shares, paying tax on a lower value and benefiting from the subsequent recovery inside Roth.

Expecting higher future taxes: If you believe tax rates will rise significantly, locking in current rates may pay off even at a moderate current tax cost.

Tax Cost and Bracket Math

Roth conversions do not all face the same marginal rate - the first dollars converted fill low brackets and the last dollars hit the highest bracket. The effective tax cost of a conversion is an average across the brackets traversed. For a joint filer with $50,000 of ordinary income who converts $50,000, the first $44,550 is in the 22% bracket and the remaining $5,450 falls into the 24% bracket, for an average marginal rate of about 22.2%.

The practical implication: large single-year conversions can be very expensive at the margin. Multiple smaller conversions over several years, each carefully sized to stop just below the next bracket or IRMAA cliff, almost always produce better results than one large conversion that blasts through multiple brackets.

Paying the Conversion Tax

A critical planning point: you should pay the conversion tax from outside the IRA (from a taxable savings or checking account), not by withholding from the conversion amount. If you withhold 25% of a $50,000 conversion for taxes, only $37,500 actually enters the Roth account - you have paid tax AND permanently reduced the amount in Roth. Paying the tax from outside funds means the full $50,000 grows in Roth tax-free.

If you are under 59½, using IRA funds to pay the tax also triggers a 10% early withdrawal penalty on the withheld amount. Always plan to have sufficient non-retirement cash available to cover the conversion tax before proceeding.

Considerations and Risks

Future tax uncertainty: The benefit of a Roth conversion depends on future tax law, which is uncertain. Converting aggressively before anticipated rate increases can pay off greatly, but if rates fall, the conversion cost may not have been justified.

IRMAA impact: Large conversions increase MAGI for IRMAA two years later, potentially raising Medicare premiums significantly. Model the IRMAA impact when planning conversion amounts near Medicare enrollment.

ACA subsidy cliff: Before Medicare eligibility, MAGI above 400% of the federal poverty level can eliminate Marketplace insurance subsidies. Roth conversions that push you above this level may destroy thousands in annual subsidies.

Irreversibility: Roth conversions cannot be undone. Precision in sizing conversions is essential.

Tax laws change frequently. Verify current limits at IRS.gov and consult a qualified financial advisor before making retirement decisions.

Roth Conversion Tax Calculator

Frequently Asked Questions

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