Roth Conversion Calculator

A Roth IRA conversion moves money from a traditional IRA (or other pre-tax retirement account) into a Roth IRA. You pay ordinary income tax on the converted amount in the year of conversion, but future growth and qualified withdrawals from the Roth account are completely tax-free. Conversions make sense when you expect to be in a higher tax bracket in retirement, you have years for the converted balance to grow tax-free, you want to eliminate required minimum distributions, or you want to leave a tax-free inheritance to heirs.

A Roth conversion is generally beneficial when your current marginal tax rate is equal to or lower than your expected retirement tax rate, giving the conversion a positive expected value. It also makes sense if you have many years until retirement (more growth to compound tax-free), if you can pay the conversion tax from non-IRA funds (so the full amount stays invested), if you anticipate large RMDs pushing you into a higher bracket, or during years of temporarily low income (such as early retirement, a sabbatical, or a year of unusual deductions).

The immediate tax cost is simply: conversion amount × your current marginal tax rate. For example, converting $50,000 at a 22% marginal rate costs $11,000 in federal income tax today. The conversion adds the converted amount to your ordinary taxable income for that year, so large conversions can push you into a higher bracket — partial conversions spread over multiple years ("Roth conversion ladder") can manage this. State income taxes may also apply.

The expected annual growth rate represents the assumed investment return for the converted funds over the years until retirement. A commonly used figure for a diversified stock/bond portfolio is 6–8% nominal annual return, though your actual allocation may differ. Using a conservative rate (5–6%) produces more cautious projections; a moderate rate (7%) is reasonable for long-horizon equity-heavy portfolios. You should also consider that Roth accounts grow tax-free while traditional accounts face required minimum distributions that affect the comparison.

This calculator uses a single marginal tax rate representing your effective combined federal rate. If your state taxes Roth conversions as ordinary income, you should add your state marginal rate to the federal rate you enter to capture the full tax cost. Most states that have an income tax treat IRA distributions and Roth conversions as ordinary income, though several states (including Florida, Texas, Nevada, and others) have no state income tax.

A Roth conversion ladder is a strategy of converting portions of a traditional IRA each year — typically an amount that fills up your current tax bracket without pushing you into the next one. By spreading conversions over 5–10 years, you can convert significant sums while minimizing the tax rate on each dollar converted. This is especially powerful during early retirement (before Social Security and RMDs begin), when income is often temporarily lower.