Roth Conversion Calculator

The trade at the center of every Roth conversion

A Roth conversion moves money out of a traditional IRA, where it grows tax-deferred and gets taxed as ordinary income at withdrawal, into a Roth IRA, where it grows tax-free and comes out tax-free once the 5-year rule and the age-59½ test are satisfied. The catch is that the converted amount is added to your ordinary income in the year of the conversion. You are voluntarily accelerating a tax bill in exchange for tax-free growth on everything that comes after.

The two-variable comparison

The math is simpler than it looks. The convert path gives you a Roth balance equal to the pre-tax dollars that made it through the conversion tax gate, grown at your assumed rate, and then untaxed at withdrawal. The stay-traditional path gives you the same starting balance grown at the same rate and then taxed at your expected retirement rate. If your current marginal rate is meaningfully lower than your expected retirement rate, the convert path wins. If it is meaningfully higher, staying deferred usually wins. If they are similar, the deciding factor is whether you can pay the tax with outside funds.

Why paying the tax from outside funds matters

When you can write the conversion-tax check from a taxable brokerage or bank account instead of pulling it from the IRA, the entire pre-tax balance moves into the Roth wrapper. That expands the tax-free footprint and shrinks the after-tax side account that would otherwise keep generating annual tax drag. Every published Roth conversion analysis assumes this quietly; if you cannot pay from outside, the case for converting weakens fast.

Bracket-fill in low-income gap years

The best conversion opportunities usually sit between retirement and the year Required Minimum Distributions begin. In that window, ordinary income drops but the retiree has not yet been forced to draw from the IRA. Converting just enough to fill a specific bracket, without spilling into the next one, is the classic bracket-fill move. It works because those low-income years never repeat once RMDs and Social Security stack in.

IRMAA and RMD spillover

Conversions raise MAGI in the year they happen. MAGI drives the IRMAA Medicare surcharge two years later, so a poorly sized conversion can push a client across a cliff and cost real dollars in premium adjustments. On the other side of the ledger, every dollar converted today is a dollar that will not be forced out as an RMD later, which reduces future taxable income, future IRMAA, and future taxable Social Security. Serious planning models both effects together.

No undo button

Recharacterization of Roth conversions was eliminated in the 2017 tax law changes. Once you convert, the decision is permanent. That is another reason to model before you execute and to space conversions across multiple years rather than doing one large event.