Transparent method
The formula
Worked example
Example inputs
How to interpret the result
A Roth conversion's real value depends on comparing today's tax rate against a genuinely uncertain future tax rate, and the conversion itself can also push income high enough in the conversion year to trigger secondary effects, higher Medicare premiums through IRMAA, phased-out credits, that a simple current-versus-future tax rate comparison alone doesn't capture.
Before you rely on it
What to check
Model IRMAA and other income-triggered effects for the specific conversion year, not just the straightforward current-versus-future tax-rate comparison.
The common error
Where people go wrong with roth conversion calculator
Evaluating a Roth conversion purely on the current-versus-future tax-rate comparison while ignoring secondary income-triggered effects like IRMAA. A conversion large enough to push income across a Medicare premium threshold can carry a real cost the basic tax-rate comparison doesn't show.
Sensitivity evidence
How amount converted changes the estimated conversion tax
| Amount converted | Estimated conversion tax | Projected tax-rate advantage |
|---|---|---|
| $40,000 | $9,600 | $3,326 |
| $45,000 | $10,800 | $3,742 |
| $50,000worked example | $12,000 | $4,158 |
| $55,000 | $13,200 | $4,574 |
| $60,000 | $14,400 | $4,989 |
Every input, tested
Which input moves the estimated conversion tax most
| Input | Tested from | To | Estimated conversion tax at each end | Swing |
|---|---|---|---|---|
| Amount converted | $45,000 | $55,000 | $10,800 to $13,200 | $2,400 (20%) |
| Current marginal tax rate | 22.0% | 26.0% | $11,000 to $13,000 | $2,000 (17%) |
| Expected future tax rate | 26.0% | 30.0% | $12,000 to $12,000 | none |
| Years until withdrawal | 11.0 years | 19.0 years | $12,000 to $12,000 | none |
| Annual return on tax funds | 4.0% | 6.0% | $12,000 to $12,000 | none |
Two variables at once
Estimated conversion tax by amount converted and current marginal tax rate
| Amount converted \ Current marginal tax rate | 20.0% | 24.0% | 28.0% |
|---|---|---|---|
| $40,000 | $8,000 | $9,600 | $11,200 |
| $45,000 | $9,000 | $10,800 | $12,600 |
| $50,000 | $10,000 | $12,000 | $14,000 |
| $55,000 | $11,000 | $13,200 | $15,400 |
| $60,000 | $12,000 | $14,400 | $16,800 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Amount converted | $50,000 |
| Current marginal tax rate | 24.0% |
| Expected future tax rate | 28.0% |
| Years until withdrawal | 15.0 years |
| Annual return on tax funds | 5.0% |
| Estimated conversion tax | $12,000 |
| Projected tax-rate advantage | $4,158 |
Where the inputs come from
Amount converted is the pre-tax balance you move from a traditional IRA to a Roth IRA, taxed as ordinary income in the conversion year. Current marginal rate is the bracket the extra income would fall in, and expected future rate is your best guess for the rate you would pay on withdrawals otherwise. Years until withdrawal and the return on the funds used to pay the tax complete the comparison. Pay the tax from outside the IRA when you can.
Using the estimated conversion tax in a real decision
Conversions are also used to shrink future RMDs and to leave tax-free money to heirs. Convert in years when your income is lower than usual.
When the result stops applying
The conversion adds to your income for the year, which can raise the taxable share of Social Security, trigger Medicare surcharges or reduce credits and subsidies. Future tax rates are unknown, and the advantage depends on that guess. Converted amounts are subject to a five-year clock before penalty-free withdrawal for those under 59½. Conversions cannot be undone.
What to compare it with
The Roth bracket fill calculator finds how much to convert without leaving your bracket, and the traditional versus Roth IRA page compares contributions. The IRMAA and taxable Social Security calculators check the side effects. The RMD calculator shows the distributions a conversion could reduce.
People also ask
Frequently asked questions
Do I owe a penalty for a Roth conversion?
No 10% penalty applies to the conversion itself, but the converted amount is taxed as ordinary income, and withdrawing converted funds within five years before age 59½ can bring a penalty.
Should I pay the conversion tax from the IRA?
Paying from outside funds leaves more in the Roth, which is generally better. Paying from the IRA reduces what is converted and may add a penalty if you are under 59½.
Can I reverse a Roth conversion?
No. Since 2018, conversions cannot be recharacterized or undone, so plan the amount carefully before you convert and leave room for the tax bill.