See if a Roth conversion is worth it: the tax you'll owe now, your break-even rate, and Roth vs. traditional after-tax value over time.
Common situations where a Roth conversion is (or isn’t) worth it.
Educational estimate, not tax advice. It compares tax rates and ignores bracket stacking, state tax, IRMAA, and the pro-rata and 5-year rules. Check with a tax professional before converting.
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A Roth conversion moves money from a pre-tax account — a Traditional IRA, 401(k), or 403(b) — into a Roth IRA. You pay ordinary income tax on the converted amount this year; in exchange it grows tax-free, comes out tax-free in retirement, and never faces required minimum distributions. This calculator shows the tax you'd owe now, your break-even tax rate, and how the Roth compares with leaving the money traditional over time.
The core question is a tax-rate arbitrage: convert when you expect your tax rate in retirement to be at least as high as your rate today. If you'll be in a lower bracket later, converting means paying a high rate now to avoid a low one — usually a losing trade. Paying the conversion tax from outside (non-retirement) funds is better than withholding it from the IRA, because more money ends up sheltered in the Roth. Beyond rates, a Roth also removes future RMDs and passes to heirs tax-free, which can tip the decision even at break-even.
Net benefit
A gap year, a layoff, or early retirement can drop you into a low bracket — a prime window to convert cheaply.
Convert just enough to “fill” your current bracket without spilling into the next one, year after year.
Converting before RMDs begin shrinks the pre-tax balance that would otherwise force taxable withdrawals at 73 or 75.
High earners barred from Roth contributions can contribute to a Traditional IRA and convert — there is no income limit on conversions.
A conversion is taxed as ordinary income the year you do it. We show the dollars you'd owe now so there are no surprises at tax time.
Convert only when your expected retirement tax rate clears your current rate. The tool spells out that break-even so the decision is clear, not a guess.
A year-by-year chart shows the tax-free Roth against the comparable after-tax value of not converting, so you see when (and whether) the Roth pulls ahead.
Roth IRAs have no lifetime RMDs, grow tax-free, and pass to heirs tax-free — reasons to convert that a pure tax-rate comparison misses.
Convert when you expect your tax rate in retirement to be at least as high as your rate today — you pay the lower rate now and withdraw tax-free later. A conversion also makes sense to eliminate future RMDs, to leave a tax-free inheritance, or to hedge against higher future tax rates, even if the pure rate comparison is close.
The amount you convert is added to your taxable income for the year and taxed at your ordinary marginal rate(s). For example, converting $50,000 while in the 22% bracket costs roughly $11,000 in federal tax (state tax may apply). Large conversions can push part of the amount into a higher bracket.
No. Income limits apply to Roth IRA contributions, not conversions — the conversion income cap was removed in 2010. That is what makes the “backdoor Roth” possible: contribute to a Traditional IRA, then convert.
From outside funds if you can. Withholding the tax from the IRA means less money lands in the Roth, and if you are under 59½ the withheld amount is itself a taxable distribution that can trigger a 10% penalty. Paying from a taxable account keeps the full balance growing tax-free.
Each conversion starts its own 5-year clock. If you withdraw converted principal before five years have passed AND before age 59½, you owe a 10% penalty on it. (A separate 5-year rule governs tax-free withdrawal of earnings.)
If your traditional IRAs hold both pre-tax and after-tax (non-deductible) money, every conversion is taxed proportionally across all of them — you cannot convert only the after-tax portion tax-free. This mainly affects backdoor Roth conversions when you have other IRA balances.
Yes. Roth IRAs have no required minimum distributions during the owner’s lifetime, so converting shrinks the pre-tax balance that would otherwise force taxable RMDs at age 73 or 75 — which can also lower Medicare IRMAA surcharges and taxes on Social Security.
There is no limit on the number or dollar amount of conversions. Many people convert over several years — a “conversion ladder” — to fill lower brackets a bit at a time and smooth out the tax hit.